The Differences Between Sports Betting & Fantasy Sports

In the US, fantasy sports have been super popular for decades, while sports betting began to get legalized nationally post-2018. Given that both practices involve money and sports knowledge, this has left many members of the public wondering what the distinction between these is. The main differences that have led to them getting different legal statuses. Why was one allowed in the United States, while the other forbidden for so long?

For the uninformed, fantasy sports, sometimes called roto or rotisserie, is a game where players create teams of real-life athletes whose actual results in the leagues they compete in act as proxies for the players’ virtual teams determining their standings in their fictional competitions. Hence, statistical performance in real-life contests is crucial to fantasy sports, as that data drives the gameplay in these games, where points get accumulated based on how well-selected athletes do in real life.

Today, despite the rising popularity of sports wagering around the globe, the fantasy sports industry is doing quite well. In 2023, it got evaluated at $30.9 billion, and experts put it on track to hit a market volume of $87 billion in the next seven years, growing at a rate of 13.8%. Comparatively, the worldwide betting market got given a projected size of $89.9 billion in 2023. Analysis guess that it is entirely realistic that this sector shall grow to pull in $182 billion by 2023, expanding at a compound growth rate of 10.6% per year.

Below, we explain the legal distinctions between these two hobbies. Getting into why they exist and how valid these reasons are.

How the Law Differentiates These Pastimes

The short of it is that federal and state US law has not seen fantasy sports as gambling because experts believe that skill/expertise determines outcomes in this activity, not chance. That gets backed up by data from the National Fantasy Baseball Championship, stats that show that the distinct players routinely rank high in competitions. That would not be possible in a game of chance, where the winds of randomness determine who will win or lose. So, the comparison between fantasy sports and sports betting is the same as poker versus casino gaming. The world’s most famous card gambling game gets considered one of skill because the same poker players keep showing up in top competitions. Hence, they must be doing something that others can’t.

Still, despite this fact, fantasy sports have still faced various legal difficulties, not only in the US but also in a wide range of countries. For example, Nevada, Washington, Idaho, Montana, and Hawaii do not allow daily fantasy sports apps to be available to their residents. Now, in these regions, the reasons for this vary. For instance, Hawaii is a religious and family-oriented part of the US that does not permit almost any type of gambling. Nevada does not want to endanger its established gambling operators, who can also supply retail sports betting to customers, by introducing another similar form of sports betting.

We also have territories like Georgia and Minnesota in the US that do not have any legislation for this activity, allowing companies from this landscape to be active in these parts of the United States, operating in a legal grey area. Iowa, on the other hand, requires providers to get a license. That is why only the top two US DFS (daily fantasy sports) entities are active in this state.

Over twenty US states have enacted laws, post-2020, that cite that fantasy sports gets regarded as games of skill that are legal and not gambling. It is vital to mention that the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, passed by George Bush’s government, through a wrench in the online poker sector, fantasy sports received an exemption from the law. That rule, referred to as the fantasy sports carveout, acknowledges that these are games of skill that will not get subjected to the identical restrictions online gambling will get.

Moreover, fantasy sports have been an established mainstream form of entertainment for decades, generating tax revenues for states, and do not get hit with the same stigma as gambling does.

Other Differences Between FS & Betting

If you have followed our site, you know we do not entirely agree that sports wagering is a pastime that only leans on chance. It is one that demands tactics, knowledge, and the use of various tools for success. Still, that aside, fantasy sports usually involve long-term engagement, often similar to the same period to the selected sport’s league. That should be obvious given that these games entail a process featuring drafting athletes, managing rosters, and accumulating points based on the statistical performances in the selected leagues. Gambling customarily provides short-term engagement. You bet on one or more events, and unless you are placing futures, you discover your outcome within a few days in most cases. Thus, the focus here is on immediate results and payouts.

The level of social interaction is usually high in fantasy sports, as the platforms that offer them customarily have online community features where players can trade negotiations or trash talk. In sports betting, every bet requires gamblers to put up their funds to finance it, whereas, in FS, players typically pay entry fees to join leagues that run through a specified period.

Gambling on sports and casino products gets subjected to heavy regulation and oversight. The same cannot get said for fantasy sports in many areas, where there are only basic fair play and anti-fraud measures that look after consumer rights. In others, players enjoy stricter regulatory frameworks, and in these regions, DFS operators get hit with specific taxation and adherence rules determined by their provided license.

A Short History of Fantasy Sports

Technically, fantasy sports got birthed in 1930, when the board game National Pastime, designed by Clifford Van Beek, featured customized MLB basketball cards and involved dice rolls to determine which MLB player would come up to bat. Players with better stats were more likely to get a favorable result in National Pastime, and this was the first case of a game using real-life athlete’s performances in its gameplay.

In 1951, APBA was another sports simulation game that gained national distribution. Start-O-Matic, in 1960, improved on the previously described concepts, even getting a computer iteration by IBM engineer John Burgeson.

As far as the initial fantasy sports leagues, these popped up in the 1950s, first using golf, and in the 1960s, baseball ones started to get traction. In the 1980s, the Rotisserie League Baseball competition got created by a group of journalists. And, in 1989, Fantasy Sports Magazine debuted as the original publication which covered multiple fantasy sports. Six years later, ESPN went live with its online fantasy baseball game, and in the second half of the 2000s, fantasy sports started to boom globally. That trend led to the creation of FanDuel in 2009 and DraftKings three years later. Today, forty-five US states allow DFS, meaning they have this pastime regulated by law. Of course, its top sector entities, FanDuel and DraftKings, have expanded in the US sports betting arena via partnerships with famed US casino operators and existing gaming venues. 

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