Washington State Law Affects Fantasy Sports Gaming Nationally

On June 7, 2006, Washington State’s ban on Internet Gaming will take effect. Simply, if a Seattle resident, at home, places a 25 cent bet on PartyPoker on the Internet she is guilty of a class C felony punishable fines up to $10,000 and/or confinement in a state correctional institution for up to five years.

Washington State’s ban, unlike the proposed federal anti-Internet gambling bill, has no carve outs for fantasy sports gaming.

In fantasy sports gaming you buy a roster of players, trade players, rely on the statistical performance of those players through the season and, if you are a superior manager, win a cash prize at the conclusion of the season. Basically, bet--sports outcome—win the pot. That’s gambling. The original target of the Wire Act was specifically aimed at prosecuting sports-based gambling.

That same Seattle resident is a felon if she participates in fantasy sports gaming. Will she be prosecuted—most likely, only if she wins. If she wins, she will not be paid. The fantasy sports gaming sponsors should be reviewing their owners for Washington State residents. While those residents may continue to play the “game” they may (and should) be asked to opt out of any prize pools. Will the fantasy sports organizers be subject to prosecution under this law? Yes. Gambling Commission Director Rick Day has indicated that his commission agents main priority will be national promoters of Internet gaming. Since the foreign iGambling sites are untouchable, the profitable fantasy sports organizers should be easy prey.

The federal carve out for fantasy or simulation sports gaming has three criteria: the win is not dependent on a sole sports contest or player’s performance in a sole sports contest; the outcome is determined predominantly by accumulated statistical results and the prize is established in advance of the game or contest and is not determined by the number or participants or the gross pay-in.

Under Washington Law, RCW 9.46.240 and 67.70.040, if there is any amount of risk such activities would constitute gambling, with the amount of skill of the Internet player being totally irrelevant.

Bottom line: A California (or whatever)-based fantasy sports business can be prosecuted under Washington law. Washington State “team owners” are risking five years in prison to play fantasy baseball this season.