Are Fantasy Sports and Daily Fantasy Sports Gambling?
The long answer: season-long fantasy sports rely on the knowledge and skill of the participant over luck and therefore generally do not constitute gambling. (That said, check whether your state legalizes online sports gambling in the first place.)
Fantasy sports played on a daily basis is on less firm ground legally, largely because the degree of chance involved in shorter-duration contests plays a larger role than the season-long fantasy sports. How a state interprets “a game of chance” differs broadly and some states place a greater emphasis on “chance” than others. Because of this ongoing legal debate on the importance of skill versus chance in determining whether something is gambling, keep a close eye on your state’s position regarding the legality of online gambling schemes.
Traditional Fantasy Sports
The difference between how season-long vs. daily fantasy sports are treated is due to time. The traditional Fantasy Sports take place over a whole season and are based on the results of dozens of games with real life individual players and team statistics. Daily Fantasy Sports (or DFS) are decided over the course of one day, which means--since professional sports teams don't play multiple games per day, they are decided by the outcome of (and statistics from) a single game. That makes all the difference in the world, legally.
Over the long haul, the better team wins, and the better players rack up better statistics (more yards, more completions, more whatever-the-criteria-is). Season-long Fantasy Sports capture long-haul performance. While chance undoubtedly plays some role--it's possible that someone's fantasy team line-up will be in bus accidents or doping scandals--it's a minimal role: pick the best players for your fantasy team, and almost certainly, over the course of the season, they'll outperform other fantasy teams and you'll win. That's why traditional or season-long Fantasy Sports are not considered gambling: chance plays very little role, and the key is selecting the best team, which is based on an understanding of the sport, knowledge of the players, matching individual players to statistical performance. In short, succeeding at season-long fantasy sports is predominately based on skill rather than chance.
Daily Fantasy Sports
Daily fantasy sports, however, is a whole other animal. Over the short-haul--a single game--anything can happen. The starting quarterback can be sick or hung over or simply having an off day. A key receiver can twist an ankle on the very first play. The underdog can be having a good or great day; the favorite could be having one of those days where no matter how hard you try, everything goes wrong. Chance--or elements beyond anticipation, and hence control--plays a huge role over the short haul.
Chance--those X-factors, like injury, illness, or simply having an off day--plays a much larger role over the course of a single game or day than over the course of a season; put simply, "chance" has a significant influence in Daily Fantasy Sports than in traditional, season-long Fantasy Sports. Chance is one of the key elements of gambling that makes Daily Fantasy Sports gambling when full-season Fantasy Sports is not.
Uncertain legal status of DFS
The real issue is not whether Daily Fantasy Sports is gambling, but whether it is legal. Gambling is primarily regulated by the states, so a state can make Daily Fantasy Sports legal--or confirm that it is illegal--regardless of whether it is classified as a "gambling" activity or not.
Since each state regulates its own forms of gambling, you have to check your state's laws to know whether DFS is a legal (or illegal) gambling activity. As of August 2018, Daily Fantasy Sports is illegal in 9 states: WA, ID, MO, NV, AZ, IA, LA, AL, and, most recently (as of writing), NY, where in the case of White et al v. Cuomo et al, a state judge struck down the legislation authorizing Daily Fantasy Sports as illegal under the state constitution. However, even though a NY judge found DFS illegal in New York, owing to the almost-certain appeal(s), the "stay" or delay in implementing the decision during appeal, and other procedural delays Daily Fantasy Sports will continue to operate until there is a final higher-court decision. (Note: Daily Fantasy Sports would be legal in NV, but operators would have to be licensed by the state to be legal--and no operators have chosen to pay the required fees or obtain a license as of writing.)
There are a handful of states (DE, VA, FL, IN, MO) which are still mulling over DFS's future. Some operators are offering Daily Fantasy Sports, but others do not, which implies there are issues or concerns.
All other states allow Daily Fantasy Sports, and all the major operators such as DraftKings and Fanduel are present in them.
What if you are a player, and DFS is or may be illegal in your state?
While you need to check your specific state's laws, most states penalize operators--the ones who provide illegal gambling--not players. Even in those states where players, too, could face penalties, they are rarely enforced. So it is very likely that as a player you have nothing to fear regarding the status of DFS; the worst that is likely to happen is that it may become unavailable to you. However, if you organize a Daily Fantasy Sports league or tournament, then you are an operator and could be subject to penalties or prosecution. So feel free to play--but don't run the neighborhood or office league unless you make sure that doing so is legal under your state's laws.