Gambling, Taxes, and Fantasy Football, Oh My! What Fans Need to Know.

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Fireworks go off as the Seattle Seahawks win following the Super Bowl XLVIII at MetLife Stadium in East Rutherford, New Jersey on February 2, 2014. The Seattle Seahawks whipped the Denver Broncos 43-8 in the first Super Bowl held in a cold weather site. UPI/Dennis Van Tine

It’s Fantasy Football draft time, y’all! Summer is winding down. Kids are starting school. Target is stocking sweaters. And football fans are anxiously awaiting the start of the season.

Full disclosure: I’ve never played fantasy football. In fact, I’ve learned everything I know about the game while researching this article… My brother loves it though.

Here’s what I’ve learned: (1) players organize leagues with anywhere from 4 to 30 other players. (2) Each member of the league creates an imaginary football team on draft day. (3) Players earn points by comparing stats throughout the season. (4) The player with the most points at the end of the season wins.

Via: www.theodysseyonline.com; Credit: project1999

I hear it’s fun. But what really interests me are the legal issues I see.

I know, I’m a nerd; you don’t have to tell me.

Is Fantasy Football legal in states that outlaw gambling?

The answer to this question is the most lawyerly answer I can give you: yes and no. It depends. Online football league powerhouses FanDuel and DraftKings offer an online platform where players can join leagues and win big money. Some states classify these sites as online gambling while others are specifically writing statutes exempting the sites from online gambling restrictions.

ESPN created a list compiling each states’ stance on these sites here. The legality of the “sport” usually rests on the classification of the game as one of skill or chance.

We can thank federal law, and the constitution (state’s rights, yo), for the hodgepodge of laws. The Federal Unlawful Internet Gambling and Enforcement Act (UIGEA) restricts internet gambling. It does not, however, include any guidelines for fantasy sports leagues.

Check your state laws if you are worried about the legality of your participation in an online Fantasy Football league. Chances are, it’s legal in your state.

Via: 20-nothings.com

Will I owe taxes if I win?

Anything you win can be taxed.

The IRS defines gross income as “all income from whatever source derived.” Additionally, the IRS will add the fair market value of any non-monetary prizes you win to your gross income each year. For example: if you win an all-expenses paid trip to Hawaii, you will get a tax document at the end of the year that tells you the fair market value of the trip. If you make $35,000 a year and the trip was worth $20,000, you will have to report $55,000 as your gross income the year you take/win the trip.

The rules and regulations controlling the taxation of gambling winnings changed this year. If you think you owe taxes on your Fantasy Football winnings, contact an accountant or tax attorney. They will be able to help you.

Happy drafting Fantasy Footballers. May the odds be ever in your favor!

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