70 Am. U. L. Rev. F. 281 (2021).

* Senior Staff Member, American University Law Review, Volume 71; J.D. Candidate, May 2022, American University Washington College of Law; B.S., Accounting and International Business, 2017, Marquette University. Getting this Comment to publication truly has been a team sport. In particular, I would like to thank Benjamin Leff, for serving as my faculty advisor; my fellow Law Review staff and editors, for their endless dedication and insightful revisions to the piece; my parents, Ken and Stephanie, and sister, Kristen, for modeling love and patience throughout my life, but especially during my time in law school; and Xabier, for his steadfast confidence and support in all my endeavors.


As legalized sports betting becomes increasingly mainstream in the United States, the characterization of daily fantasy sports—an accelerated version of traditional fantasy sports often played on sportsbook platforms—continues to undergo intense scrutiny. Within a three-month span, the Internal Revenue Service (IRS) issued two legal advice memoranda related to the taxation of daily fantasy sports. In one memorandum, the IRS is seeking to impose an excise tax on entry fees received by daily fantasy sports operators and, in the other, the IRS plans to allow a deduction for such entry fees as losses from wagering transactions.

While Congress has long imposed a federal excise tax on wagering, the statute and corresponding regulations fail to adequately define what exactly constitutes a wager. Courts, and the IRS itself, have attempted to further interpret the term; however, the definition of wager within the Internal Revenue Code remains ambiguous. As wagering activities in the United States grow more popular, and more intricate, there is insufficient authority clearly articulating when a taxpayer is liable for the excise tax. As this Comment explains, entry fees paid to participate in a contest for prize money are not transformed into taxable wagers simply because they are collected by daily fantasy sports operators and, furthermore, the arguments on both sides are significantly more complex than set forth by the IRS in its memoranda.

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