DraftKings and FanDuel kept the fantasy label for daily bets

The Unlawful Internet Gambling Enforcement Act of 2006 made it a crime for banks to process payments to internet betting sites, but its own text carved fantasy sports contests out of the definition of a 'bet or wager' -- on the reasoning that a season-long contest built around assembling and managing a roster over many games rewards a participant's skill and judgment, not the outcome of any single event, and so isn't gambling in the sense the law targeted.

That carve-out was written with traditional, season-long fantasy leagues in mind, where a participant's roster decisions compound and interact across dozens of games over months. Any online product built around real-money entry fees and payouts still had to fit inside that same statutory label to keep its payments flowing through the banking system the Act policed -- there was no other lawful channel for an online real-money contest to operate through.

kept the label while compressing play into single-day bets

UIGEA exempted fantasy sports by category label, not by testing each contest's skill-versus-chance structure.

Daily fantasy kept the label by still drafting rosters and scoring real stats, so payment processors treated it as exempt.

Compressing play to one day made it function like a wager, but the label held until a regulator examined the substance.

New York's 2015 cease-and-desist showed the label stopped protecting the product once enforcement tested it.

When a law exempts a category by name, you can redesign the mechanics under that name—but budget for the exemption being tested against what you actually do.

DraftKings and FanDuel scaled into a multibillion-dollar industry before New York's 2015 cease-and-desist forced a legal reckoning.