The fantasy sports market was valued at $30.5 billion in 2023. Every year, the industry inches closer to nationwide legalization and regulation. In addition to state law amendments, federal laws and state common law interpretations of existing gambling and lottery laws pave the way forward for the continued expansion of the fantasy sports industry. In addition to ensuring compliance with state and federal regulations, companies need to prioritize obtaining a fantasy sports opinion letter from an experienced law firm before entering the market.
Start With a Fantasy Sports Opinion Letter
Obtaining a fantasy sports opinion letter from a qualified law firm is a prerequisite to payment processors accepting fantasy sports operators as clients. Banks, credit card companies, and payment processors alike require that daily fantasy sports businesses obtain a fantasy sports opinion letter from a law firm with knowledge and expertise in the fantasy sports and gaming space. The opinion letter will detail that, upon a review of the subject fantasy sports operator's business practices, the operator adheres to the many federal and state requirements that apply to its fantasy sports offerings.
What Information Should a Fantasy Sports Opinion Letter Include?
The content of a fantasy sports opinion letter will vary on a case by case basis. However, most payment processors require that opinion letters include:
- Specific details regarding the gameplay parameters of the daily fantasy sports operator's offerings;
- Whether the contest design, fee structure, prize payouts and other features of the subject fantasy sports contests comply with applicable state and federal law;
- Whether the fantasy sports offerings cannot be provided to residents of certain states because of noncompliance with said states' regulations; and
- Whether or not the subject fantasy sports offerings comply with applicable federal laws, such as, the 2006 Unlawful Internet Gambling Enforcement Act ("UIGEA"), the Interstate Wire Act (the "Wire Act"), the Professional and Amateur Sports Protection Act ("PASPA"), the Federal Antigambling Statute (the "Gambling Act") and the Travel Act.
Retain a Fantasy Sports Lawyer to Draft Your Opinion Letter
Fantasy sports operations cannot function without bank, credit card and payment processing services. To retain these services, each fantasy sports operator must demonstrate compliance with applicable state and federal regulations by presenting a fantasy sports opinion letter from a law firm that practices in the field. As part of the process, law firms that focus on fantasy sports law will, among other things, evaluate operator game models, craft contest rules, and review marketing collateral and customer registration processes. Once all of the foregoing are determined to be in order, the fantasy sports attorneys can proceed with preparing a comprehensive opinion letter for submission to payment processors.
Please note that this is only a brief overview of some of the legal issues surrounding daily fantasy sports and the opinion letters required to obtain payment processing services.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
