The Attorney General Responds to a Request for an Official Advisory Opinion in Accordance with § 2.2-505 of the Code of Virginia

VIRGINIA (December 12, 2023) — The Attorney General responds to a request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You inquire regarding the proper classification of a gambling scenario that involves customers of online contest operators placing bets on the performance metrics of specific athletes. You specifically ask whether an arrangement involving only a single customer constitutes a “fantasy contest” or “sports betting” under Virginia law.

Response

It is my opinion that, because fantasy contests require multiple customers competing against each other, a gambling arrangement that involves customers betting on athletes’ performance metrics against an operator’s established baseline, and not other contest participants, constitutes sports betting as defined in Virginia Code § 58.1 -4030.

Background

You relate that various on line contest operators offer online gambling contests to customers within the Commonwealth. You inquire regarding contests that are marketed as “fantasy games” and commonly known as a “pick’em-style” fantasy contest or an “over/under player prop pick em” game. The operator of such games typically offers the customer a defined selection of athletes, each of whom is assigned a target outcome for a certain statistical category, such as passing yards or receiving yards in football. To play, the customer selects at least two athletes from the list and takes a wager on whether each selected athlete will achieve a given statistical outcome in a specified sporting event. The more athletes a customer selects, the higher the multiplier for the prize payout. There is no set wager amount or set entry fee for the contest; rather the customer inputs the amount he wishes to wager, and a winning wager receives the sum of the wager times the multiplier if all aspects of the wager are correct. The contests are single player games and customers do not compete against other players, but instead against metrics established by the operator (“the house”).

Applicable Law and Discussion

The Supreme Court recently affirmed that “gambling” is “conduct that may be heavily regulated and even banned by the Commonwealth as an exercise of its police powers.”’ Pursuant to its police power, Virginia classifies illegal gambling as a Class 3 misdemeanor.² Illegal gambling” is defined as “the making, placing, or receipt of any bet or wager in the Commonwealth of money or other consideration made in exchange for a chance to win a prize, stake, or other consideration …, dependent upon the result of any game, contest, or any other event the outcome of which is uncertain or a matter of chance……………………………………………………………………………………………… ”’

Conduct that otherwise would constitute illegal gambling is permitted in some circumstances.⁴ Pertinent to your inquiry are “fantasy contests” and “sports betting,” which were independently legalized in 2016 and 2020, respectively.⁵ Although these activities have much in common, Virginia law views them as distinct enterprises,⁶ and they are subject to different regulatory schemes.⁷ Simply styling a game as “fantasy” does not make it a “fantasy contest” under Virginia law; rather your inquiry involves distinguishing between the two practices, which requires analysis of the statutory definitions of each.

The Fantasy Contests Act allows licensed entities, each known as a “fantasy contest operator,” to offer consumers, “fantasy contest players,” online or simulated game for play.’ Per statute, a “fantasy contest” is “any online fantasy or simulated game or contest with an entry fee in which” specified conditions are present.’ First, “the value of all prizes and awards offered to winning participants is established and made known to the participants in advance of the contest[.] ‘⁰ Second, “all winning outcomes reflect the relative knowledge and skill of the participants and shall be determined by accumulated statistical results of the performance of individuals, including athletes in the case of sports events[.]”’ Third, “no winning outcome is based on the score, point spread, or any performance of any single actual team or combination of teams or solely on any single performance of an individual athlete or player in any single actual event. ‘2

A plain reading of the statutory definition of “fantasy contest” thus reveals three key elements.'” In simplified terms they are 1) prizes are established and known in advance of the contest; 2) participants compete against each other and winners are determined based on accumulation of statistical performance; and 3) outcomes are not based on actual, single performances or event results. Accordingly, a “fantasy contest” is one in which multiple individual contestants earn points based on statistical, not actual, results of athletes’ performances and a contestant wins upon garnering more points than the other contestants. The contest operator, or “the house,” is not intended to be one of the individual contestants in a multi-player fantasy contest.’⁴

“Sports betting” is defined broadly as placing wagers on professional sports, college sports, amateur sports, sporting events, or any other [approved] event … and any portion thereof, and includes placing wagers related to the individual performance statistics of athletes in such sports and events. “Sports betting” includes any [approved] system or method of wagering …, including single-game bets, teaser bets, parlays, over-under, money line, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.[¹⁵

Notably, wagers made as part of a fantasy contest do not constitute bets on “professional sports” and are not “sports betting.”^I”

A comparison of these statutory definitions reveals some key distinctions between fantasy contests and sports betting. I first note that, while fantasy contests are limited to bets that relate to performance statistics of individual athletes, sports betting encompasses a broader range of betting options, whereby, in sports betting, gamblers can place bets on multiple aspects of sporting events, such as the final score, point spreads, and other aspects of a given game. Contests that offer participants the option to bet on these aspects of sporting events lie outside the scope of fantasy contests.

To the extent a specific instance of gambling involves betting on the performance statistics of individual athletes, other elements determine whether the conduct qual ifies as a fantasy contest. The definition of “fantasy sports” clearly requires multiple contestants competing against one another for a win, with winning being determined by the contestants’ “relative knowledge and skill[.]” In contrast, “sports betting” is a form of gambling where individuals wager on the outcomes of actual sporting events or specific statistical performances against the betting operator or house. Unlike fantasy contests, no specified entry fee is required, and the performance of other bettors is irrelevant. Moreover, a fantasy contest can be determined only “based on ac’cuntulation of statistical performance ; determinations based solely on the “single performance of an individual athlete or player in any single actual event” is expressly excluded from the definition of “fantasy contest.” The key distinctions thus lie in the fact that the i esults of sports betting can be determined by a specific performance of an individual athlete, and without direct competition between bettors, as is the case in “fantasy contests.”

You describe online contests currently available to customers within Virginia that are known as “pick’em style” or “over/under player prop pick’em” games and ask whether, as described, these contests constitute “fantasy contest” or “sports betting” under Virg inia law. Based upon the legal distinctions and distinguishing features set forth above, in particular whether there is direct competition between customers, I conclude that the gambling ai’rangements you present do not fit the definition of a “fantasy contest” but rather align more closely with a form of “sports betting.” Although the fact that individual contestants are not competing against each other is critical to this determination, I further conclude that, to the extent contest results hinge solely on individual performance metrics stemming from a single sporting event, the contest also falls outside the definition of “fantasy contest” and instead constitutes sports betting.”

Conclusion

Accordingly, it is my opinion that when a customer places a bet related to individual athletes’ performance metrics, the outcome of which is determined by reference to a contest operator’s established baseline rather than choices made by other customers, the customer is engaged in sports betting and not a fantasy contest.

Click Here to see the AG’s official response.