The UIGEA 'Fantasy Sports Exemption'

The **UIGEA 'Fantasy Sports Exemption'** (2006) was a legislative carve-out designed to protect season-long fantasy leagues from banking prohibitions targeting online gambling. However, it inadvertently created a **"Grey Market" loophole** that gave rise to **Daily Fantasy Sports (DFS)**. **Key Technical Components:** * **31 U.S.C. § 5362(1)(E)(ix):** The specific statute defining fantasy sports as games of skill dependent on accumulated statistics of multiple athletes, rather than single-game outcomes or point spreads. * **Payment Processing Shield:** Unlike online poker, which was starved of liquidity by the UIGEA, fantasy operators retained access to mainstream banking rails (Visa/Mastercard). * **The DFS Pivot:** Operators like DraftKings and FanDuel utilized this federal cover to build high-frequency wagering products that mimicked sports betting mechanics while technically complying with the "multiple events" requirement. This exemption allowed the current US market leaders to build their user bases and technology stacks prior to the 2018 repeal of PASPA, effectively serving as the incubation period for the modern US sports betting industry.