How Is DraftKings Legal? And What States Don’t Allow It?

Three cheers for DraftKings being legal!

Three cheers for DraftKings being legal!

By Steve Beauregard (Updated November 26 8th, 2016)

First off, yes, playing daily fantasy sports online on sites like DraftKings is legal in all but 11 of the 50 states (more on that below).

There is no federal law that prohibits American citizens from playing on DraftKings, or FanDuel, or one of the many other daily fantasy sports sites that are popping up like weeds.

But how is DraftKings legal?

Simple. It’s called the UIEGA, or the Unlawful Internet Gambling Enforcement Act of 2006.

The UIEGA is the provision (snuck into a terrorism-related port bill at the last minute in the fall of 2006), that led to the destruction of the online poker boom in the United States.

Without getting too bogged down in the details, the UIEGA prohibited banks from facilitating financial transaction to what they called illegal gambling operations.

It also, however, contained a special “care-out” provision that specifically allowed American citizens to bet on online horse racing and on fantasy sports.

Why those two sports, and not, say, online slot machines for example?

Wording in the bill classified horse racing and fantasy sports as games of skill, and therefore legal. Poker, of course, is a game of skill, but was not included in the carve-out exemption, but that’s a topic for another article.

What turned out to be a death knell for online poker however, became the legal foundation for the incredibly popular online fantasy sports market we see today.

(Related: Sign-up using the DraftKings promo code GJ100, or register on DraftKings via one of the banners on this page to receive a free $3 tournament entry after making your first deposit. Please note I receive a commission from DraftKings should you do so. Thanks.)

States where it is Illegal to Play on DraftKings

Although there is no federal law making online fantasy football, baseball, basketball, etc. illegal, each individual state can pass their own laws of course. In addition, an individual state’s attorney can rule the game illegal in that particular state. As such, eleven states have made playing on sites like DraftKings against the law for citizens of their states.

Those states are as follows: Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, and Washington. The major DFS (daily fantasy sports) sites like DraftKings and FanDuel won’t allow residents of these states to register on their respective sites.

Is DraftKings Legal in Texas?

If you’re counting the list of banned states above, you’ll find that’s only ten states, and I mentioned eleven states total. The difference is Texas.

The State of Texas considers daily fantasy sports to be illegal. Draftkings, however, is fighting this in court, and is allowing players from the Lone Star state to play dfs games on their site while the legal process unfolds. (FanDuel does not allow Texans to play based on an agreement with the state)

Also, while you must be 18 years or older to legally play on DraftKings, there are some exceptions. In Nebraska, you must be at least 19 years of age to play. In Massachusetts, you must be 21 years old to play.

Legal Aspects of DraftKings.Com and their Partners

In case you don’t want to take legal advice from a writer like me with no law degree and who went to a state college, further evidence of the legality of DraftKings can be found by listening to attorneys and executives from large, respected institutions, such as the NBA, NBC, ESPN, and Major League Baseball.

According to SportsBusinessDaily.com, MLB’s general counsel, Mike Mellis, led an extensive review process in 2014, to make sure everything was on the up-and-up (not a legal term), before MLB took a major equity position in DraftKings in April of 2015.

MLB commissioner Rob Manfred told SportsBusinessDaily: “I think there is a clear legal line, and quite frankly, we’ve spent some considerable effort and money to make sure we knew where DraftKings was in relation to that line.”

Manfred also told the Washington Post in April of 2015: “We’re comfortable that the games on DraftKings are on the right side of the legality line.”

(Related: What is the FanDuel Promo Code?)

On the corporate front, major corporations like NBC Universal, Comcast and Time Warner, have taken ownership positions in FanDuel, as has the N.B.A. DraftKings has similar corporate equity partners. Fox Sports, for example owns 11% of DraftKings.

Reliant Stadium in Houston Texas.

The fact these major sites are partially owned by either sports leagues and/or large, respectable publically-owned American corporations doesn’t make playing fantasy sports on sites like DraftKings legal, of course. However, you can bet that stable, risk-adverse behemoths like NBC Universal, did their due diligence with regards to the legality of daily fantasy sports before investing their millions into the sites.

So is DraftKings legal?

Well let’s just say that high-priced lawyers from Major League Baseball, the N.B.A., ESPN, and other large corporations seem to think so. (Photos courtesy of Keith Allison and Ed Schipul via Flickr).