NFL Betting and Fantasy Football: Is It Legal?

The NFL is back in the United States, and with it comes endless opportunities to place bets and participate in fantasy leagues. But what does the law say about playing for real-money in the US?

Fantasy Sports

The good news, according to legal experts, is that playing fantasy football for real-money is legal under federal law. The 2006 UIGEA, which effectively banned online gambling, exempts fantasy sports so long as: 1) the value of the prizes is not determined by the number of participants or the fees paid; 2) winning outcomes reflect the relative knowledge and skill of the participants; 3) the fantasy result is not based on the final scores of real-world games.

However, it is worth noting that some states have stricter regulations. In general, state laws deem fantasy football to be illegal if they involve the following three characteristics: an entry fee, prize and chance. Most states only clamp down on fantasy if it involved more chance than skill, but some strict states rule it illegal if results are based even slightly on chance ("any chance test").

Betting on Matches

With a wide range of sportsbooks including the Vegas betting firms, it isn't hard to find somewhere to place a wager on NFL matches. It is worth noting, however, that there are tax obligations for those who gamble.

All gambling winnings are included in taxable income under Section 61: therefore all winnings must legally be reported to the IRS. For those who are not professional gamblers and just enjoy the occasional wager on a game, winnings must be reported on Line 21: Other Income.

As always, if you have particular concerns, you should contact a tax specialist.