One day fantasy leagues, and fantasy sports in general, are not illegal as per the Unlawful Internet Gambling Enforcement Act of 2006. This law, the one that outlawed financial transactions between U.S, residents and internet gambling sites does not prohibit the use of fantasy sport sites because they are not deemed to be games of chance like blackjack, slot machines, and craps are. For this reason, at the Federal level at least, playing fantasy sports online, even with single day leagues, is completely legal.
The reasoning behind this is the fact that you can use knowledge to give yourself an advantage with one day leagues. The exception to this is based upon how the prizing and payouts are determined. As long as the payouts of cash rewards are determined before hand, the game is not considered to be gambling and the UIGEA does not apply to it.
There are some things to consider first, though. You must be 18 at least to play daily fantasy sports online, except in Alabama and Nebraska, where you must be 19. It doesn’t matter which sports you choose to play, they are all legal in the U.S. as long as you are of the proper age and the prize packages are clearly stated before people begin to sign up for the contest. All of the major sites do this, so there’s really no reason to worry. There are a few grey areas, though. Some states are titled “any chance” states, and technically, any game that involves chance at all is not legal. Federal law allows fantasy sports, but in these states, you do stand the risk of running into problems. Enforcement of these laws is not always consistent, but you may find yourself being unable to collect your winnings in certain scenarios. These states include: Arizona, Iowa, Vermont, Montana, and Louisiana. The specific laws refer to paying to enter a contest if there is any degree of chance involved, so theoretically playing in free leagues would be okay if you wish to do that. Florida has technically banned fantasy sports in their state, presenting even more problems for fantasy fans that live there. In these cases, it is advised to stay away from pay-to-play one day leagues. The best fantasy sites like Fanduel and DraftKings will tell you what you can and can’t do.
The big caveat that you need to take into consideration is the fact that skill plays a large role in the outcome of fantasy sports. It’s quite similar to poker in this respect, although poker is still considered illegal in most of the country. The games are quite similar in nature, especially when it comes to the variance levels. You will have ups and downs when you play one day leagues, much like grinding it out at the poker tables, but a good strategy will net a long term gain for you, even if you go through the occasional losing streak. It’s just like a good athlete, in fact. Even the best homerun hitter in MLB can go weeks without trotting around the bases. This doesn’t mean they won’t have good numbers at the end of the season, though. Skill plays a large role in your success.
You want to use that skill to your advantage as much as possible. Believe it or not, most managers don’t rely on their skill enough when drafting a team, and it’s usually luck that gets them through, assuming they place in the money in their leagues. Cutting back on the luck element of the game and using your own acquired skill to your advantage will help you to increase your earnings over the long term.
It is considered mandatory for you to report your fantasy earnings to the IRS every year. Reputable sites will send you the proper tax forms if your winnings meet a certain minimum threshold at the end of the year.