YooNew is an online exchange based in New York City where fans may buy and sell “ticket derivatives”. The ticket derivatives are rights to tickets conditional on certain teams playing in certain playoff matches. So if you were to buy a New England Patriots Superbowl 42 “Fantasy Seat” for $1500, knowing that tickets to the game will likely go for around $3000, you are essentially betting that the Patriots have at least a 50% chance of making it to the game.
It seems like we have consideration, prize and chance here – involving sports no less. What about fantasy sports? Could YooNew be considered a type of fantasy sports league and thus exempted under UIGEA? Here is the relevant exemption from the law:
(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:
(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of
participants or the amount of any fees paid by those participants.
(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical
results of the performance of individuals (athletes in the case of sports events) in multiple real-world
sporting or other events.
(III) No winning outcome is based–(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.
It seems that YooNew is not a sports fantasy game so defined, because the winning outcomes are based on the fortunes of real-world teams.
On a more positive note, the above language is pretty broad, especially the part about accumulated results. This is reasonable because when results are accumulated chance is less of a factor, both for the performing individual and the predictors.
Wouldn’t someone’s political nomination be determined by their “accumulated statistical results” in primaries (“other events”)? If you argue that the nomination is a single event that takes place one night, what if you closed the market the day before? How about inauguration futures instead of election futures? That is, even if an election is considered a single event, to get to the inauguration an individual must have accumulated results in multiple events.
As you can see, the fantasy sports and “educational game” exemption invites a lot of hair-splitting. How would “team” be defined for non-sports questions? If the “prize” for a given bet is 1000 $10 contracts, was that value determined by the number of participants? Would it make a difference if the prize was given by a central party or by many counterparties on an exchange?
I don’t expect these ideas to make any difference, as they are only ideas, and given how aggressive the DOJ has been in the past, people should be well-warned about being cavalier with “legal hacks”.
