The Rise of Daily Fantasy Sports (DFS)

The **Rise of Daily Fantasy Sports (DFS)** illustrates how a legislative loophole in the **UIGEA (2006)** created a multi-billion dollar industry that served as the precursor to regulated US sports betting. By classifying fantasy sports as **"Games of Skill"** (specifically utilizing the **Salary Cap** mechanic to create optimization puzzles), operators like **DraftKings** and **FanDuel** bypassed federal gambling prohibitions. **Key Phases:** * **The Loophole:** The UIGEA banned online poker but exempted fantasy sports, allowing for real-money contests. * **The Crisis (2015):** An "insider trading" scandal involving employee data usage triggered a regulatory crackdown, forcing states to formally define DFS as either gambling or a distinct contest category. * **The Pivot (2018):** Following the repeal of **PASPA**, DFS operators leveraged their massive user databases to dominate the newly legalized sports betting market, effectively blocking out established European bookmakers. * **Current Friction:** The rise of **"Pick'em" Fantasy** (PrizePicks, Underdog) challenges the distinction between DFS and Prop Betting, leading to renewed regulatory battles over "House vs. Player" mechanics.