Modern Day Bucket Shops?

The rapid emergence of online daily fantasy sports has raised questions as to why the contests are allowed, while other forms of gambling are restricted. Historically, “bucket shops” were banned enterprises where businesses would effectively accept wagers on whether companies’ stock prices would go up or down. There was never an underlying investment in companies themselves, only a deposit into a “bucket.” While bucket shops have largely faded, we examine whether they have disappeared in name only. Our analysis opens up another avenue for regulators beyond the antiquated skill-versus-chance evaluation typically applied to gambling activities and suggests that certain fantasy contests may run counter to Commodity Futures Trading Commission regulations. Applying this existing regulatory framework would likely enhance consumer protection and market integrity.