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¿4Ì\ Journal of S -!Z HARVARD I..AW SCHOOL ¿4ì\ Journal of S -!Z HARVARD I..AW SCHOOL A Short Treatise on Fantasy Sports and the Law: How America Regulates its New National Pastime Marc Edelmanl TABLEOFCONTENTS I. I¡,¡rnooucrroN. .. 3 II. Tlrr H¡sronv on Feuresv Sponm LE¡,curs 4 A. Beþre Fantasy Sports 4 B, A Neu Gøne is Creøted 5 C. TIte Fira Roüsserie Leøgue Baseball Auction 7 D, Rotisserie Baseball Grows in Poþrlarity I E. Tlte Internet Boon . 9 III. Tue Fexrmv Sponrs lrqoustnv Toolv ll ' Marc Edelman is a member of the faculty at Barry University's Dwayne O. Andreas School of Law in Orlando, FL and a summer adjunct professor ¿t Fordham University School of Law in New York, NY ([email protected]). Professor Edelman earned his B.S. in economics from the rù(/harton School (University of Pennsylvania) and both his J.D. and M.,{. from the University of Michigan. !íhile a law student at the University of Michigan, Professor Edelman founded the fantasy sports dispute resolution business, SportsJudge.com. In addition, Professor Edelman has served as a legal consultant to various fantasy sports businesses. Professor Edelman wishes to thank ,tmit Schlesinger, Erica Cohen, Kristen Chiger and Raleigh \Øebber for their research assistance. He also wishes to thank his wife, Rachel Leeds Edelman, for her assistance in developing the concept for a course in Fantasy Sports & the Law, and rhe students in his 2011 seminar on Fantasy Sports & the Law for providing their insights on fantasy sports gaming. Professor Edelman retains full copyright to this article and has agreed to provide the HaruardJoarnal of Sports and Entertainment Lau with an irrevocable license to publish this work. Copyright @ 2011 by the President and Fellows of Harvard College. Electronic copy available at: http://ssrn.com/abstract=1907272 HantardJoarnal of Sports & Entertainnent Law I Vol. 3 A. Different Tyþæ of Fantasy Ganes . ll l. Different Fantasy Sports t2 2. Different lVays to Initially Allocate Players . .... tt 3. Different Season Lengths I5 B. Tbe Staþebold¿rs I6 1. Participants r6 2. Host Sites t9 3. Commissioners.... 2t 4. Treasurers )) ,. Strategic Advisors 24 6. lnsurers 2t IV. LEcn Rrsxs Fon Fenrlsv Sponrs Hosr SIrrs 25 A. State Ganbling l^øut. 26 1. Is Fantasy Sports Illegal Gambling under State Law?.. 26 2. Is Fantasy Sports Illegal Gambling? (Majority View). 29 3. Stricter Views Toward Fantasy Sporm 30 4, Montana's Alternative Test of Fantasy Sports . 33 B. Federøl Gambling l-aw.. 34 1. Interstate Vire Á,ct of 196l 34 2. Illegal Gambling Business Act . .. 35 3. Professional and Amateur Sports Protection Act 36 4. Uniform Internet Gambling Act .. 37 C. lntellectual Propaty Iøws . 38 1. Patent Law.. 38 2. Copyright Law .. 39 3. Trademark Law.. 40 4. Right to Publicity 42 V. Lrcer R¡srs Fon Frnrmv Sponrs Penrlc¡p¿¡,¡rs. .. ... 45 A. Criminal Liability ander Ganbling løus 4, B, Ciail Lidbility for Gømbling Aaiabies 46 C. Violating Comþany Anti-Solicitation Policies 46 D, Bankruþtcy 47 VI. L¡c¡,r Rrsrs Fon Ar.¡c¡rr¡Ry FANTAsy Sponrs BusrN¡ssrs 48 A, Fantasy Sports Treøsury Sites .. 48 B. Fantasy Sports Adaisors 49 C, Fantøsy Sþorts lnsurønce , . , , t1 D, Fantasy Sporx Dispute Raolution t2 VII. Cor.¡crus¡or.¡ 52 Electronic copy available at: http://ssrn.com/abstract=1907272 2012 / A Short Treatise on Fantasy Sports and tbe l-aut I. INrnopuc'r'roN America is in the midst of a "fantasy s¡rorts revolt¡tion" that is chang- ing the way sporrs fans interact with one another.' \With m<¡re chan 30 j million Americans playing fantasy s¡rorts, tocìay's s1>orts fans s¡rencl as much time predicting the performance of professional athletes as \ùØall Street in- vestors spend predicting stocks and bonds.r Some fantasy sports contests, such as the \ùl/orlcl Championship of Fan- tasy Football, charge participanrs entry fees in the thousands of dollars, and offer grand prizes upwards of $300,000.' Meanwhile, other br.rsiness ven- tures, such as Bloomberg Sports, sell fantasy participants "analytical tools" and "expert advice."6 One insurance carrier, Fantasy Sports Insurance, has even begun to offer fantasy pafticipants insurance policies against injury to their star fantasy players.' Nevertheless, with the rapid and unexpected emergence of fantasy sports, few have devoted time to understanding how U.S. law applies to fantasy sports businesses and their participants. Thus, many have miscon- ceptions about the law of fantasy sports. This article explains how U.S. law regulates the emerging fantasy sports industry. Part I of this article provides an overview of the history of ' Neil;anowitz, Bet on Footltall, D¡¡urocRRl'& CHRoN. (Rochester, NY), Sept. 16, 2005, at 128, auailøble at 20O5 \øLNR 269O0861 ; see aho infra, notes I 59 - 169 and accompanying text. ¡ ,i¿¿ Gene \Øang, Fantasy Football Gex Benched, \Wrsn. Posr, May 29,2011, at D3 (estimating about 30 million participants in fantasy football); Tom Van Riper, A Gry's Fdntas!, FoRnrs, Feb. 28, 201I, at 23 (estimated the entire fantasy sports marketplace at 30 million participants). a See generally Fantary Football tVeb¡ite Aim¡ to Choose the Best Athletes Uing a Formala Daiued from Wall Street, Iß Creatrrs øre Mo¡t Definitely Bullish on Fantasy Sporx, Ftrt. Su¡{-Sh¡rl¡,¡aL, Aug. 26, 2OO9, ar 1D (drawing comparisons between the selection of fantasy sports teams and investment portfolios). t ,l¿¿ Chris Dempsey, Fantar! Reuoløion )nline Craze is Intoxicating to Anericau, tVorld,DrNv. and Exþanding Oatside tlte Sportt Posr, Sept. 9,2007 , at Bl (describing the entry fees and prizes involved in the !Øorld Series ofFantasy Football); Erick S. Lee, Play Ball!: Sub¡titating Carrent Federal Non-Regilation of Fantasy Sþorts Leagtes witb Linind Superaision of Hyþa-Conþøitiue Leagnes, Lov. L.Â. ENr. L. F.nv. J3,64 (2008) (describing "the rise of hyper-competitive fantasy leagues offering cash prizes as high as S100,000"); Childs \Øalker, DreanTeans: Tired of Second Grctsing Hou Yoar Faaorite Sporr Clnbs Are Managed? Fantasy l*agau I¿t Yol TaÞe Charge of tbe Action, THn Barr. SuN, March 6,2006, at lD ("You can find high-stakes na- tional games with top prizes in the hundreds of thousands of dollars."). 6 See infra, notes 161 -764 and accompanying text. 1 See infra notes 165 - 169 and accompanying rexr. HaruardJoarnal of Sports €t En¡erlainntenl lttut / VoL 3 fantasy sports leagues. Part II explores the fantasy s¡rorts indr"rstry t<lclay. Part III explains how U.S. laws apply to fantasy sports host sites. Part IV discusses how U.S. laws apply to fantasy sl)orts participants. Finally, Part V applies U.S. laws to businesses that ¡:rovicle ancillary services to fantasy sports host sites and participants. II. Tr¡n Hrsronv or Far.¡rnsv Sponrs Lnlcur;s A. Before Fantasy Sþorts For the American sports fan, professional sports once meant simply an opportunity to attend games, root for teams, and second-guess "the men who ran [theJ teams."8 Then, in the 1920s, the company Ethan Allen re- leased a "table game" called All-Star Baseball, which allowed baseball fans to simulate team management by choosing a "team" from a collection of player cards and selecting the team's lineup.e Each player's performance in All-Star Baseball was determined by probabilities that were derived from the players' actual past performances, in conjunction with the random event of rotating a spinner over these cards."t For almost forty years, All-Star Baseball v/as seen as the best way for sports fans to simulate ream management. I' Then, in 1961, Hal Richman, a Bucknell University mathematics student, devised a more complex simula- tion game.r2 Richman's game, Strat-O-Matic Baseball, included one play- ' Valker, suþra note 5. e tVhy David G. Roberts Jr., Note, The Rigltt of Púlicity ancl Fantasy Sports: the C.B.C. Distribution Coart Got lt'Vrong,58 C¡s¡ L. Rav. 223,231 (2007); ¡ee al¡o Tiþh Play: Per¡onal Reuieras, Op-Ed Pieces, and Polenics fron Ouride tbe Pwvietu of the Unpiret, NrNr, Sept, 22, 2006, ar 110, auailal¡le at 2006 \7LNR 24732952. to See Triple Play, snpra note 9. t' ld, t2 See Yøn Riper, saþra note 3 at 24; Stuarr Miller, Strat-O-Matic Deulteer Celebrate Its 50tb Anniaersary, N.Y. TIvrs, Feb. 14, 20'll, at D5 ("In his 20s, af¡er discour- agement from his father and rejection from numerous companies, Richman bor- rowed money from friends and started [Strat-O-Matic] on his own."); Cody Derespina, Strat-OTarningtlteBig5-Ob!, NrvsDay, Feb. 13, 20II,at Â73 (funher noting that "Richman began to develop the game as an ll-year-old in 1948 alter becoming dissatisfied with the statistical randomness present in other baseball games of the era. He found that using dice added an element of predictability that jibed with the results of actual ballgames."); Calling All SABR G¿¿å¡, N.Y, D,urv Nnvs, Feb. 6, 2011, at 73; Mike James, Extra Base¡: Strat Stretcha Board Game History to 50 Years, USA Too,rv, Jan. I 1, 20ll , at 8C; Rich Freeman, Strat-)-Matic Still Going,S/roag, TnnNtoN Trvns, Jul. 7, 201O, at B2. 2012 / A Short Trcatise on Fantasy Sports and the l-atu ing card for each Major League Baseball player.'i Each card c<¡ntainecl various ratings and result tables that corresponded to dice rolls.''r For each game, Strat-O-Matic participants would select teams and batting orclers, roll the dice, and then review charts to determine game results.'t By the 1980s, many other companies had joined Ethan Allen and Strat- O-Matic in the simulation sports market, with some companies, such as Micro League Baseball and Avalon Hill, providing their games digitally via the computer.'(' One of the benefits of playing
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