- Thomson Reuters
Illinois Attorney General Lisa Madigan said that the daily fantasy games offered by FanDuel and DraftKings constitute illegal gambling in an opinion released on Wednesday night.
Illinois is the latest state to ban daily fantasy-sports contests. New York and Nevada did so earlier this year, though a New York appeals court has granted an emergency stay on the order to shut down operations in the state.
In a letter to State Reps. Elgie R. Sims Jr. and Scott R. Drury, Madigan said that the contests “constitute illegal gambling under subsection 28-1(a) of the Criminal Code of 2012 … and the exemption set forth in subsection 28-1(b)(2) of the Criminal Code … does not apply.”
Sims and Drury are chairperson and vice-chairperson, respectively, of the state’s Criminal Committee and had previously inquired to Madigan as to the legality of daily fantasy-sports contests in the state.
The relevant section of the state’s criminal code, as highlighted in the letter, says:
(a) A person commits gambling when he or she:
(1) knowingly plays a game of chance or skill for money or other thing of value, unless excepted in subsection (b) of this Section
[ … ]
(12) knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any game, contest, political nomination, appointment, or election by means of the Internet. This item (12) does not apply to activities referenced in items (6) and (6.1) of subsection (b) of this Section.
Madigan noted the theoretically relevant exception of subsection 28-1(a), which allows “Offers of prizes, award or compensation to the actual contestants in any bona fide contest for the determination of skill, speed, strength or endurance,” but determined that “in the context of daily fantasy sports, the ‘actual contestant’ … is the athlete.”
The letter goes on to say that “persons whose wagers depend upon how particular, selected athletes perform in actual sporting events stand in no different stead than persons who wager on the outcome of any sporting event in which they are not participants.”
In short, Madigan does not believe the exemption applies.
The attorney general did note in her conclusion that pending legislation called the Fantasy Contests Act seeks to exempt fantasy contests as it defines them. Madigan used the legislation’s existence and sponsorship to suggest that Illinois General Assembly members had also concluded that the contests were currently illegal.
The opinion was also sent to DraftKings and FanDuel, with a cover letter obtained by Legal Sports Report saying that Madigan expected the sites to change their terms to include Illinois as a new ineligible state. As of Wednesday night, neither site has added Illinois to the list of excluded states on their terms of service posted online.
Danny Ecker, a reporter for Chicago Business, tweeted a statement from Illinois State Rep. Mike Zalewski, who had proposed the Fantasy Contests Act:
Statement from IL state Rep. Mike Zalewski, who proposed pending bill to legalize DFS: pic.twitter.com/XM87PoPXcY
— Danny Ecker (@DannyEcker) December 23, 2015
In a statement obtained by Legal Sports Report, Jeff Ifrah, founder of a law firm that handles cases involving online gaming, said that the opinion would not be binding in the state.
“Obviously, a court is not bound by her decision and ultimately the judge presiding in those cases may very well disagree with her opinion,” Ifrah said.
A FanDuel representative provided an emailed statement to Business Insider:
Chicago may be the best sports town in the country. It’s a city – and Illinois is a state – that plays fantasy sports like almost no other. “The League” is even set in Illinois. So why the attorney general would tell her 13.5 million constituents they can’t play fantasy sports anymore as they know it – and make no mistake, her opinion bans all forms of fantasy sports played for money – is beyond us. Hopefully, the legislature will give back to the people of Illinois the games they love. A sports town like Chicago and a sports-loving state like Illinois deserves nothing less.
A DraftKings representative provided an emailed statement from David Boies, the company’s counsel:
We respectfully disagree with the Attorney General’s opinion and the reasoning behind it. We believe daily fantasy sports, which Illinois residents have been playing for years, are lawful under state law. We also believe, as the Attorney General has said, that this is a policy question for state legislators to address. That is why we look forward to working with lawmakers, like Representative Mike Zalewski and others, who wish to enact thoughtful and common-sense legislation that protects consumers’ rights to compete, while also adopting appropriate consumer protections. The company intends to promptly seek a judicial resolution of its right to offer daily fantasy sports contests to Illinois residents. As it does so, it will continue to abide by all relevant laws and will follow the direction of the courts. Pending that resolution the company will preserve the status quo.
Illinois is only the latest in a long series of roadblocks that the two sites have faced since news broke that a DraftKings employee with access to game data had won large sums in a FanDuel contest.
Nevada banned the games in October and, earlier this month, the companies were ordered to shut down their operations in New York while their case was ongoing. Hours later, the businesses were granted an emergency stay allowing them to resume operating in New York for the time being.
Both companies are currently accepting bets in New York, though FanDuel’s terms still include text forbidding the depositing of bets from New York. Only hours before Chicago’s attorney general released her letter, New York’s AG, Eric Schneiderman, released a filing saying that the emergency stay in his state allowed the businesses to “continue expanding their gambling operations.”