MLB, union prohibit players from daily fantasy games

Daily Fantasy Fix (6:59)

The newest rage in fantasy sports is netting some players six figures but also sparking a debate about online gambling. (6:59)

Major League Baseball and the players' association have agreed to a deal that forbids players from playing in daily fantasy baseball games that involve a prize, but still allows them to endorse these companies.

Earlier this week, at the IMG World Congress in California, commissioner Rob Manfred said that although he considered daily fantasy different from gambling, playing fantasy for prizes became part of Rule 21, which prohibits players from gambling. Players will be subject to discipline if they are found to have violated the rule.

Sources involved in the talks between the league and the players' association said that there was indeed concern over conflict of interest or at least the appearance of a conflict of interest in which the players could affect the outcome and potentially make money off of it.

The deal between MLB and the players' association does not preclude the players from playing fantasy baseball when something of value is not involved and they can play fantasy sports other than baseball for prizes. It also doesn't stop any player from accepting compensation from a daily fantasy site to endorse or promote the company or the players' association from signing an official deal with one of those companies.

Major League Baseball acquired a stake of daily fantasy sports site DraftKings in 2013 when the site became the league's official daily fantasy game. The league recently received a larger stake as part of an expansion of that original deal.

Fantasy sports were carved out as a game of skill and not chance, and therefore not legally defined as gambling, in the Unlawful Internet Gambling Enforcement Act of 2006.

"There is a clear legal line and, quite frankly, we spent some considerable effort and money to make sure we knew where DraftKings is in relation to that line and we're very comfortable with the idea that it's fantasy," Manfred said at the conference, organized by the SportsBusiness Journal. "Having said that, fantasy is a very important method of engagement, particularly with younger people."

Daily fantasy sites, including DraftKings and its main competitor FanDuel, have said that the profile of a daily fantasy player skews much younger than season-long fantasy players. That's of interest to baseball in particular because the game's executives are more concerned with the sport's aging fan base than executives of any other major sport. The median age for the audience of a national MLB telecast is now 55, up from 50 just six years ago.

Sources say that Manfred's office is expected to implement a similar prohibition of playing daily fantasy baseball for prizes that would cover all non-playing personnel.

Earlier this month, Disney, parent company of ESPN, acquired a reported 20 percent equity stake in DraftKings. Recent investments in both DraftKings and FanDuel have valued the companies at least $1 billion each.