Did You Know Your Fantasy Football League Might be Illegal?

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Millions of Americans engage in creating fantasy football teams. It can be a fun way to add an extra layer of enjoyment to the season and, for some, to add an extra investment in the fan's favorite players and teams. While most fans only worry about who they will start on their fantasy team on Sunday, if their league has an entry fee or awards prizes, they may be engaging in illegal activity.

First, there is the tax consequence. Any income, including winnings from a fantasy football league, have to be reported as income to the IRS or one could face tax evasion charges. In fact, the Unlawful Internet Gambling Act of 2006 would specifically require this reporting, even if the winnings are not legal in that person's jurisdiction. If the fantasy football fan reports any winnings, s/he will probably be okay with the federal authorities. But, as mentioned, state laws may not be so easily satisfied.

Unfortunately, gambling of any kind can be illegal in some states. In fact, some states make fantasy football specifically illegal if results are based, even in the smallest part, on chance. Obviously, these laws generally apply to any game of chance, so other favorites like poker, bingo, or other forms of sports betting would also be illegal in many of these jurisdictions unless otherwise specified (such as carve outs in some jurisdictions allowing games like bingo for purposes of charity and religious organizations).

In a handful of other states, like Florida and Kansas, state authorities have called into doubt the legality of fantasy football for money under any circumstances. This is in large part because of the completely unregulated nature of most fantasy football leagues. In fact, while many may feel that poker night with their friends is safer and somehow more legal, even if the state prohibits or highly regulates gambling, the case is usually just the opposite. While the state may lack any meaningful way of enforcing its gambling regulation laws, most jurisdictions are loathe to allow unregulated gambling because of its association with organized crime and because of the loss of potential tax revenues.

As a result, fantasy football may be illegal in your jurisdiction. The risk is not mitigated, but actually enhanced if you engage in online football leagues, because your league may be subject to the laws of not just your state, but every other state in which your league members reside. Indeed, because the online league is crossing state lines, it could even trigger federal laws against racketeering!

However, in the grand scheme of crime prevention, fantasy football leagues do not rank very highly, either in terms of actual enforcement or public concern. Indeed, there are doubtless many law enforcement officers engaging in fantasy football leagues right now without even being aware that they are technically breaking the law. As a result, the odds of your league creating a significant risk that the police will be breaking down your door and dragging you out in handcuffs should be relatively small. Nevertheless, being aware of the legalities of fantasy football in your jurisdiction may be wise.

If you are already in a fantasy league and want to check on the legality of it in your jurisdiction, or you are thinking about creating a league, you should consult a local attorney. They will be able to help you set up and monitor your league to keep it out of legal hot water, and they will also be able to give you direction on how best to claim your winnings or losses to remain in compliance with federal tax laws.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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