The House Energy and Commerce Committee released draft text for the Gaming Accountability and Modernization Enhancement Act (“GAME Act”), which seeks to repeal the Professional and Amateur Sports Protection Act of 1992 (PASPA) and legalize state-sanctioned sports betting and online gambling.
PASPA currently prohibits the vast majority of states from legalizing sports betting. If passed, the GAME Act would authorize states to legalize “gaming activity” as long as consumer protections are also adopted. As drafted, “gaming activity” includes the “placing, receiving, or otherwise transmitting a bet or wager.” The bill defines a “bet or wager” as:
The staking or risking by any person of something of value…upon the outcome of a contest of others, a sporting event, a game subject to chance, or game in which the outcomes reflect the relative knowledge or skill of the participants, upon an agreement or understanding that the person or another will receive something of value in the event of a certain outcome.
Notably, the draft bill goes on to explicitly designate the participation in fantasy sports and fantasy e-sports as being included within the definition of a legalized bet or wager. Thus, if enacted, entities offering fantasy sports contests would be subject to the same set of consumer protections as entities engaged in traditional sports betting. The minimum consumer protections that the bill sets forth includes licensing or certification, transparency, age and location verification, appropriate tax collection, privacy and data security, and safeguards against crime and compulsive play. For the most part, these protections mirror many of the regulatory frameworks already enacted by the states that have officially legalized fantasy sports. Although, this federal version specifically includes oversight by the Federal Trade Commission.
This bill would also clear the path for states that currently interpret PASPA as prohibiting the state regulation of fantasy sports. However, it is important to remember that such an interpretation is seriously misguided. Simply put, fantasy sports contests are not a “betting, gambling, or wagering scheme” as contemplated under PASPA. Paid-entry fantasy sports games are contests of skill that do not implicate the same types of concerns that traditional betting does. This is why twelve states have already passed fantasy sports legislation.
While the GAME Act brings fantasy sports within the definition of a legalized “bet or wager,” such a designation is ultimately unnecessary – and slightly perplexing. Designating fantasy sports as within the definition of “bet or wager” appears to put the GAME Act in tension with the Unlawful Internet Gambling Enforcement Act (UIGEA) given that UIGEA explicitly excludes fantasy sports from its definition of “bet or wager.”
Ultimately, this bill has a long way to go. Congressional and industry support is unclear. And, as noted, there are a few wrinkles that likely need to be ironed out. As always, we will keep monitoring the situation and provide updates as they come in.