Last week, the Kansas Gaming & Racing Commission (“KGRC”) updated the “Frequently Asked Questions” on its website to reflect its position that fantasy sports leagues violate Kansas law against gambling. Under Kansas law, a “bet” is defined as “a bargain in which the parties agree that, dependent upon change, one stands to win or lose something of value specified in the agreement,” K.S.A. 21-6403(a), and the Kansas Supreme Court has ruled that whether a game involves “chance” or skill depends on whether chance predominates. Against the backdrop of these legal principles, we find it hard to understand how the KGRC reached the conclusion that fantasy sports leagues constitute illegal gambling under Kansas law.
The FAQs in which the KGRC made this announcement has almost no analysis of how fantasy sports satisfies the three elements of illegal gambling: (1) prize; (2) chance; and (3) consideration. It notes that, in most cases of fantasy sports leagues, there is no dispute as to whether the prize and consideration elements are met.
As for the chance element, the KGRC expressly acknowledges that “there are some elements of skill involved in fantasy leagues.” It observes that “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, KGRC notes a number of elements of chance involved, including how a drafted athlete actually performs in a given event, whether a drafted player is injured, 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 how opponents of the fantasy sports participant drafted by another manager actually play. Without further analysis (or explanation), KGRC then simply states that “[f]or those reasons, chance predominates over skill in fantasy sports leagues.”
KGRC’s conclusion that chance predominates in fantasy sports leagues reflects a poor understanding of how fantasy sports work. By researching and analyzing readily available information, skilled fantasy sports players can adapt to all of the chance factors cited by the KGRC (other than the performance of the opponents’ team), and thereby exercise skill in response to these events of chance. Given that skilled fantasy sports players generally prevail over less skilled players, it is hard to understand how KGRC could conclude that chance predominates in this activity.
KGRC’s FAQs is not binding on any court, and does not necessarily mean that any Kansas state agency will take action against fantasy sports operators accepting money from Kansas residents. But it is inevitable that the KGRC’s conclusion that fantasy sports leagues violate Kansas law may lead to some fantasy sports operators to reevaluate if they will allows Kansas residents to participate in pay-to-play fantasy sports games. KGRC cited a similar opinion issued by the Florida Attorney General (albeit in 1991), but most states have reached contrary conclusions, at least with regard to full-season fantasy sports leagues. Hopefully, the Kansas opinion does not signal that states will begin to restrict the ability to offer pay-to-play fantasy sports online.