That post title is worth trademarking, so we did it. It sums up what we are all about at FantasySportsLive.com
When the UIGEA of 2006 passed, it signaled a major turning point in online gaming regulation. It was very bad news for the offshore online poker rooms, sports books, and casinos. These all fall under the category of gaming in the UIGEA. Bill Frist snuck this bill into the port security act that was sure to get it passed, and got it through with little debate or review. In its attempt to identify what was "gaming", it was forced to carve out what would not be considered "betting or wagering" (i.e. gaming) in the USA. The obvious carve outs were made for insurance, options trading... Some less obvious carve outs were made for things like online state lotteries, online horse race betting, and online fantasy sports. All of these carve outs are for things that could be interpreted as gaming, but the lobbies for interstate lotteries and horse racing are just too strong, and that's how politics work. Also, such a high percentage of voters play fantasy sports that touching that would be political suicide.
So we looked at what was done specifically on Fantasy Sports in the legislation. It turns out that fantasy sports had been operating in a legal gray area up until the passage of the UIGEA. Big fortune 500 companies like Yahoo, Disney, and CBS were taking chances by hosting fee based fantasy contests with cash prizes, but the contests were so profitable for those companies, and they were paying taxes on their profits, so they felt much safer than say an offshore sports book. So they continued to operate in a legal gray area, and chose to litigate as required against their customers, and faced zero pressure from the government. There are some major cases still pending against the big boys for running gaming-type operations prior to the UIGEA.
So now fantasy sports are perfectly legal to operate online, and in the U.S. will not be considered "betting or wagering" provided that you meet all the requirements outlined by the UIGEA. It is here that we get you Bill Frist. It's the politicking that made the bill be written the way it was, and this is and will always be your weakness. Money. So we use the framework that Bill Frist provided to revolutionize fantasy sports. We decided to rewrite the rules of fantasy sports!
So what did we do?
First of all, we realized that the big companies were holding back due to the legal uncertainties, and sticking with their cash cow traditional fantasy offerings. It would take a start-up like us to shake things up. We decided to find a way to make fantasy contests as exciting and action packed as possible, while fully complying with the requirements of the UIGEA. We realized that we could offer contests that lasted as little as three hours, just the length of a single game or event, as long as other games started and finished in the same time frame. We could take the early football games on Sunday for example and create fantasy teams using just the players from those games. We could form contests up in real time, like a sit and go, collect entry fees, and pay cash prizes however we like as long as we guarantee the prizes before taking the entries. With the latest live scoring update technology, we could score the individual contests real-time so that you could have your laptop next to the TV as you watch the games, and view the real-time results of your contests.
To do this right, we would need to abandon a fundamental business model in fantasy sports. We would have to give our contestants a realistic chance at winning, if they were truly more skillful then their opponents. The problem with the season long contests is the service keeps almost all the money, and pays just a handful of big prizes. No matter how good you are, your chances of actually winning the advertised big prize in your lifetime is almost zero.
We thought it would be better if we paid out almost all of the entry fees back in prizes. Typically 90% minimum is paid back. We also keep the contests small. Currently 2, 6, and 10 player contests paying the winner, top 2, and top 3 respectively. In these types of contests, the skill factor can play a huge roll long-term and you can beat these contests for a profit. Without that, we have something pretty cool and a nice alternative to season long fantasy sports. With the ability to use your skill level to profit from the contests, we bring a revolution to fantasy sports.
Are you on board?