In 2006 Congress passed a law called the Unlawful Internet Gambling Enforcement Act, which didn’t ban online betting but rather, banned banks from processing payments for it. It carved out one exception: fantasy sports, because Congress considered it a game of skill, not a game of chance like betting on a single game is.
And in 2006 “fantasy sports” meant a season-long league with your friends, like how you draft a team in August and watch it all year, and ultimately have a ridiculous challenge for the loser at the end. DraftKings and FanDuel took that old exception and built something Congress never pictured: contests you enter and get paid out on the same day, over and over, all season long. They argued it was still “fantasy sports” under the 2006 law, just faster. For years, regulators mostly let it slide.
