Are Fantasy Sports Leagues legal?
As with any other illegal gambling matter, if a fantasy sports league involves the elements of (1) prize, (2) chance and (3) consideration, then it is an illegal "lottery" prohibited by Kansas criminal law. See K.S.A. 21-6404. Typically, fantasy leagues involve participants ("owners" or "managers") who assemble a fantasy team via a pretend draft of professional athletes. Each manager's team then accumulates points based on their selections' weekly individual performances.
In most local fantasy sports leagues, the prize and consideration elements are not in doubt. As prizes, local leagues typically award something valuable to the top finishers. Prizes can include cash, gift certificates, televisions, or other items redeemed from tickets. Likewise, the "consideration" element is not doubtful in leagues that require managers to pay some fee to participate. Under Kansas law, consideration means "anything which is a commercial or financial advantage to the promoter or a disadvantage to any participant." K.S.A. 21-6403(c). The facts of each fantasy league resolve whether the consideration element is met. Certainly, if the fantasy league requires an entry fee payment, "buy-in", "ownership fee" or required "donation," then the consideration element is satisfied.
The only element that fantasy league participants attempt to counter is that fantasy leagues are predominantly games of chance. Under Kansas law, the chance element is satisfied if it predominates over any skill involved. See Games Management, Inc. v. Owens, 233 Kan. 444, 446, 662 P.2d 260 (1983) (calling it the "dominant factor" test). We do not argue that there are some elements of skill involved in fantasy leagues. Particularly, fantasy managers must be knowledgeable of player statistics, and must execute some strategy in selecting the best players for their fantasy team. On the other hand, a manager leaves to chance a number of things, including: (1) how a drafted athlete performs in a future event; (2) whether a drafted player is injured; (3) whether the player's actual team in a given week executes a game plan that fits the player's talents; whether the coach calls plays that favor the player; and (4) how opponents of the actual player (who may be drafted by another manager) actually play. For those reasons, chance predominates over skill in fantasy sports leagues.
In short, if a fantasy sports league has a buy-in (no matter what it is called) for its managers and gives a prize, then all three elements of an illegal lottery are satisfied. The Florida Attorney General's office reached the same conclusion in its formal opinion AGO91-03.