[5][6] The popularity of the daily fantasy format has been credited to its convenience in comparison to season-length games, as well as the focus on major cash prizes in the promotion of these services.
[7] In the U.S., these issues became largely moot in 2018, when the Professional and Amateur Sports Protection Act of 1992 was struck down in the Supreme Court lawsuit Murphy v. National Collegiate Athletic Association.
[2][8][9] DFS contests typically utilize a salary cap format, in which players are allotted a maximum budget to spend on athletes for their team, represented as either play money or points.
[10] In "Double-up" or "50/50" cash game competitions, players win a prize equal to double their entry fee if they finish with a score within the top 50% of all participants.
[16] In 1990, a pair of nationwide fantasy games, Dugout Derby and Pigskin Playoff, were launched in a variety of newspapers across the United States, including the Arizona Republic,[17] the Hartford Courant,[18] the Los Angeles Times,[19][20] and the Miami Herald.
[citation needed] Also in November, the National Basketball Association acquired an equity stake in FanDuel and entered into a four-year sponsorship deal with the company.
The rise was credited to several factors, including the convenience of the format, the ability to access the services on mobile devices, and aggressive marketing campaigns which promoted the prospective cash prizes of their largest contests.
[6] Moneyball, one of the first Australian DFS services, was also established by former Fairfax Media employees James Fitzgerald and Rax Huq; the company secured $1.8 million in series A funding.
Fitzgerald noted that the sports betting industry in Australia had brought in $900 million in yearly revenue and that DFS was "a more ethically and morally preferred means of partnership with a bookmaker.
In August 2015, a class action lawsuit was filed against DraftKings, alleging that it engaged in false advertising in regards to a promotion in which the service claimed it would double a new user's first deposit.
[43] In the wake of the scandal, multiple class-action lawsuits were filed against both DraftKings and FanDuel, with suits alleging charges such as fraud, racketeering, negligence, and false advertising, arguing that the employees' use of inside information had made the games unfair.
FanDuel objected to the lawsuit, arguing that its use of his likeness fell within existing case law surrounding the use of player names and statistics in fantasy sports games.
[48] In December 2015, Canadian media company TheScore launched QuickDraft, a daily fantasy game targeted at both Canada and the United States, based on the intellectual property of its 2014 acquisition of Swoopt.
[49] DraftKings and FanDuel attempted to merge in 2017, but the deal was shelved after the U.S. Federal Trade Commission threatened to block it over concerns that the combined company would have a monopoly on paid DFS.
[3] The marketing push was met with a negative reaction from viewers on social networks such as Twitter, who considered the repetitive airplay of DFS commercials during football games to be an annoyance.
[84][85] Bloomberg Businessweek acknowledged that daily fantasy contests are often won by a minority of skilled professional players, or "sharks", who employ "elaborate statistical modeling and automated tools that can manage hundreds of entries at once and identify the weakest opponents".
FanDuel CEO Nigel Eccles disputed the accuracy of the study, arguing that its daily fantasy baseball contests do not have as many participants as those it runs for football.
[87][88] Writing for The New York Times Magazine, Jay Caspian Kang argued that DFS games themselves were "not inherently crooked", explaining that "most of the benefits praised by its enthusiasts — the ease of play, the camaraderie among fans, the challenge of solving what amounts to a math puzzle — are real.
It does take skill to parse game film, diligently follow the news and interpret the thousands of bits of sports information that are generated each night.
[78][103] The act itself does not define unlawful internet wagering, and expressly refrains from altering the legality of any underlying conduct other than funds transfers, meaning that state law remains binding.
[90][105][106] Daily fantasy services have historically blocked residents of Arizona, Iowa, Louisiana, Montana and Washington from participating in paid games, under a presumption that DFS is illegal in these states due to the strictness of their gambling laws.
[107][12][40][74][83] However, a November 2015 investigation by The New York Times found that these geoblock restrictions could easily be circumvented using anonymous proxies, and it was estimated that in 2014, DraftKings had still collected $484,897 in entry fees from players in the five states where it had voluntarily asserted that DFS was illegal.
[119] On March 7, 2016, the state of Virginia passed legislation regulating "fantasy contests", defined as skill-based games with cash prizes that are based on the "accumulated statistical results of the performance of individuals"; the law makes no reference to sports or DFS.
[84][130] On November 17, 2015, the Attorney General filed a request for a temporary injunction to force DraftKings and FanDuel to cease serving customers in the state of New York.
Schneiderman also acknowledged that the two services had "basic compliance issues" (alluding to the inside information scandal), had associated themselves with gambling-oriented entities, and that DraftKings had accepted entry fees from users in states where it argued that DFS was illegal.
[129] On December 11, 2015, the temporary injunction was granted, forbidding DraftKings and FanDuel from "accepting entry fees, wagers or bets" from residents of New York state.
Surowiecki argued that "given the absence of a good argument for why daily fantasy should be illegal in New York, while the lottery and racetrack betting and casinos are not, the best strategy that DraftKings and FanDuel could pursue might be to get the State Legislature to eliminate the inconsistency and explicitly legalize them.
"[139] On March 21, 2016, the Attorney General announced a partial settlement of its lawsuit, under which DraftKings and FanDuel agreed to cease offering paid games in the state of New York, and abide by the result of an upcoming appeals court hearing.
Daily fantasy providers will be required to pay 15.5% of their annual revenue to the New York Lottery's education fund in order to serve customers in the state.
[146] On March 31, 2016, DraftKings and FanDuel jointly agreed to stop offering daily fantasy college sports following the conclusion of the 2016 NCAA Men's Division I Basketball Tournament.