No Harm, No Foul: Daily Fantasy Sports under Philippine Law

by: Leo Fornesa

Fantasy sports provide a whole new experience for sports enthusiasts. The fans are no longer limited to just cheering for their favorite player and team but they can actually create and manage their own fantasy team based on real life or the actual performance of professional players. Thanks to a bunch of nerdy writers who first formed “rotisserie” baseball, we now have the phenomenon of fantasy sports.

I’m an avid fantasy sports enthusiast myself. And a month before every NBA season begins, I research the statistics of players and projections for the upcoming season. It’s my fifth straight year of playing Fantasy Basketball along with friends—and I’m determined to win it all this year.

What is Fantasy Sports?

Fantasy sports is generally described as a game where “participants, as ‘owners[,]’ assemble ‘simulated teams’ with rosters and/or lineups of actual players of a professional sport.”[1] The performance of players in actual games is converted into “fantasy points.”[2] The individual scores will be compiled for each lineup and the team with the most statistical points wins the game.[3]

Putting “Daily” in Fantasy Sports

 Fantasy sports took a turn when a former professional poker player introduced Daily Fantasy Sports (DFS) through his site FantasySportsLive.com.[4] DFS “are leagues that are formed for games played on one day.”[5] In layman’s term, DFS is Fantasy sports on steroids. The traditional fantasy sports typically has its winners at the end of each season, and only then can the participant get the pot money and (more importantly) the bragging rights. However, DFS gave more emphasis on bigger and quicker payouts; this opened the floodgates to other participants who aren’t that into sports. In a short span of time, DFS industry has grown exponentially in the US and is seen to grow further in couple of years.

What’s the relevance of DFS?

What is the significance of all these fantasy blabber under Philippine context? First, local and foreign sites have already been operating and been offering DFS in the Philippines. Second, these sites are operating in an unregulated and free market, which could lead to potential problems such as gambling addiction. Third, with the current administration’s view toward gambling (note the recent the Ongpin-Philweb controversy and Presidential order to stop online gambling), a discussion of DFS is vital moving forward.

Is DFS gambling?

 Yes. DFS is gambling under Philippine law. Article 195 of the Revised Penal Code (as amended by P.D. No. 1602)[6] makes it illegal for any person (other than specific exceptions) to “directly or indirectly take part in … any other game or scheme upon chance or skill wherein wages consisting of money, articles of value or representative of value are at stake or made.”[7] DFS fits into the elements of gambling as seen below.

 Elements of Gambling

a. Game or Scheme

As defined in the case of PAGCOR v. Philippine Gaming Jurisdiction Inc, a game is defined as “a sport, pastime, or contest.”[8] Scheme is defined as “a systemic plan; a connected; a connected or orderly arrangement . . . or an artful plot or plan, usu. to deceive others.”[9]

DFS is a pastime and contest. Pastime is defined as “an activity that you enjoy doing during your free time.” This broad definition of pastime captures what DFS is. It is also a contest as expressly declared within their various sites.

b. Depends upon chance or winning

In the United States, the battle cry for DFS sites is that what they offer are games of skill. However, even assuming that skill predominates or is the determining factor (through selection of players) in the outcome of each contest, this “skill argument” is immaterial because under Philippine law, consideration is the deciding factor.

c. Wagers consisting of money and the act of wagering

Wagers or bets consisting of money are present in form of “entry fees” participants must pay in order to enter or join paid DFS contests. These contests vary from head-to-head matchups or tournament style, wherein a certain percentage of the participants win. Obviously, the last element in relation to wagers is likewise present. The act of putting the entry fees at stake is done in order for a chance to win bigger prizes.

Legal or illegal?

DFS is gambling. The elements are there. But the question is, is it legal or illegal gambling?

DFS is an illegal form of gambling. Gambling is generally punishable by law, “unless another law is enacted by Congress expressly exempting or excluding certain forms of gambling from the reach of criminal law.”[10] An example is P.D. No. 1869, grating PAGCOR a franchise to operate gambling casinos and allows for the regulation of certain forms of gambling.[11] The legality of DFS hinges on the presence of an exempting law, which is not present in this case.

It seems unmistakable that DFS is illegal gambling—there’s no law or franchise allowing it. However, a 2012 Court of Appeals decision seems to indicate otherwise. In Lim v. PAGCOR, the appellate court ruled that online gambling is not those acts punishable by law. It specifically cited P.D. No. 1602, the same law I used to classify DFS as gambling, arguing that online gambling is not those acts specifically punishable by law and following the doctrine of nullum crimen nulla poena sine lege, thus, there is no crime when there is no law penalizing it.[12] But as appellate court decisions are merely persuasive, the legality of DFS is still in limbo.

What we’re left with is a legal controversy that needs to be addressed. Unless Congress passes a law that specifically punishes DFS or online gambling as a whole, there could be no imposition of penalty in this kind of activity. However, just imposing a total prohibition or ban could also pose problems, especially with implementation. As an alternative, regulation through PAGCOR is the more practical and effective step, not only with the controlling it through existing measures already in place (e.g. e-bingo) but also the revenue generating capacity it can provide.

Leo Fornesa is currently a 4th year student in Ateneo Law School. He is the co-captain for the Ateneo conflicts basketball team, Warriors fan (don’t worry haters, not a band wagoner), aspiring triathlete, and surfer.  The article is a compressed version of his J.D. thesis.

 

 

[1] Adam Laxalt, Legal Opinion, Office of State of Nevada Office of Attorney General, October 16, 2015, available at http://www.legalsportsreport.com/wp-content/uploads/2015/10/Nevada-AG-DFS.pdf (last accessed July 18, 2016).

[2] Id.

[3] Id.

[4] Marc Edelman, Navigating the Legal Risks of Daily Fantasy Sports: A Detailed Primer in Federal and State Gambling Law, 2016 Univ. Ill. Law Rev 117, 124 (2016).

[5] Dan Frey and Tyson Wilson, A Brief Look at Fantasy Sports. Washington State Gambling Commission

[6] Prescribing Stiffer Penalties On Illegal Gambling, Presidential Decree No. 1602 (1978).

[7] P.D. No. 1602, §1(a)(1).

[8] PAGCOR v. Philippine Gaming Jurisdiction Inc. (PEJI) 586 SCRA 659, 665 (Citing Black’s Law Dictionary, Sixth Edition, West Publishing Co., St. Paul, Minnesota, U.S.A., 1990, pp. 679 and 84.)

[9] Black’s Law Dictionary, Seventh Edition, West Publishing Co., St. Paul, Minnesota, U.S.A., 1999, pp. 1346.

[10] Lim vs. Pacquing, 240 SCRA 649, 674 (1995).

[11] PAGCOR Charter, §1.

[12] Lim v. PAGCOR, CA-G.R. SP No. 108448 (2012)

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