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New Law Opens Up Maryland for Online Fantasy Betting

Websites use an exception in a new law to allow players to bet against friends, coworkers or strangers in daily or weekly fantasy sports competitions.

A new law that allows Marylanders to accept the pool from a friends’ fantasy football league may have an unintended consequence as it opens the door for a new wave of online sports betting that revolves around fantasy teams.

Each week, thousands of people put millions of dollars on the line in daily or weekly fantasy sports leagues that allow competitors to pick and choose players from different teams and put them up against fantasy teams of friends, co-workers or even strangers.

These fantasy sports websites, such as FanDeul, Fanball and FantasySportsLive.com, are legal in most states since 2006, thanks to an exception in a federal law passed that year banning most online gambling.

However, Maryland was one state where the sites weren’t legal, because fantasy sports fell under a 2006 opinion by the state’s attorney general’s office that defined gambling as requiring decisions, the element of chance and a prize, according to the Washington Post.

But a law passed this year in the General Assembly, which went into effect on Oct. 1, officially gave Marylanders the right to win prizes, including cash, in Fantasy Football leagues. 

These leagues aren’t like your standard Fantasy Football league made up of your friends that last an entire season. Some leagues only last one day, or one weekend.

(For the uninitiated, here’s how fantasy sports work: a competitor picks a certain number of players from all the teams in the league, for his fantasy team. Over time, the real players all compete in real games. At the end of the specific time period, the competitor who drafted the statistically best real players wins the game or the league.)

For example, you could draft a fantasy football team on Fanduel.com on Thursday morning for just week 6’s football games, entered a five-person league for that week, place $10 on your team, then by the end of Monday night’s game, the person who racked up the most points would receive $45 (the site takes a 10 percent cut.) Some of these weekend leagues have thousands of dollars riding on the outcome.

Fanduel, which is reportedly the most popular online fantasy betting website, claimed it has distributed $3 million to players monthly in 2010, according to Forbes.

When Patch brought these sites to the attention of the Maryland comptroller’s office, a spokesperson wrote in an email that the sites meeting “the statutory definition of ‘fantasy competition’ may legally operate in Maryland.”

The statute states in order for a site to be a fantasy sports website, which residents can accept prizes from, then all prizes offered must be known to participants in advance of the contest and the winning result must be based on the skill of competitors who are able to best choose individuals in a sport who put up the best statistics.

Based on this bill, Fanduel removed Maryland from its list of states in which it was illegal for residents to participate, according to a comparison of the site's “Is FanDuel Legal? page” from July and October. (Arizona, Iowa, Louisiana, Montana and Alaska are still on the illegal list).

“Presumably it is possible for a site to call itself an online fantasy competitionbut in reality be an online gambling site,” wrote Kim Frum, a spokesperson for the comptroller’s office in an email. “If so, this may be the area in which the regulations are contemplated and in which the Comptroller has been authorized to adopt such regulations.”

For its part, Fanduel posts a full page with an explanation of why this form of online fantasy sports betting is legal. On the page, it says, “The laws relating to fantasy sports varies by State [sic] however in the vast majority of them fantasy sports is considered a game of skill and therefore legal. In most States a game of skill is classed as game where skill is the predominant factor in determining the winner.”

What do you think: Are daily or weekly fantasy sports games of skill or a games of chance?

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Ryan Parr October 14, 2012 at 06:22 PM
Thanks for a very informative (and even better) accurate article. I am actually a 3rd generation Annapolitan and also happen to be the founder/CEO of a company that offers daily fantasy sports games called Fantazzle Fantasy Sports Games - www.fantazzle.com - where you can play free or entry fee games for cash prizes. The company has been headquartered in Arlington, VA since then and part of the reason for that was because of Maryland's legal status on fantasy games. Before I began the company, I had an extensive legal opinion created on the legality issues and was quite dismayed that Maryland was one of a handful of states that had a questionable status. Now with the law passed, I plan on moving back to the Annapolis, Maryland area and working from here and I'm extremely happy that MD not only passed the law, but took the time to do so. I won't argue there are plenty of more important topics to discuss, but from what I understand the process was quite quick and with little time expended. Before the law was passed, if you paid to enter any type of fantasy game, even if it was to pay for the use of the software and won, you could not even receive a hat or keychain for that win. Yes there are elements of chance with Fantazzle's types of fantasy games, but there is also an element of chance that when you cross the street you may not make it. I'm very happy to see Maryland pass this law. I'd be happy to share any info. Ryan Parr Founder Fantazzle Fantasy Games
coach001 December 01, 2012 at 07:29 AM
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