Illinois Attorney General rules DFS illegal

Daily fantasy sports judged to meet definition of gambling in latest blow to industry heavyweights FanDuel and DraftKings

Daily fantasy sports (DFS) operators FanDuel and DraftKings have suffered yet another blow after Illinois Attorney General Lisa Madigan ruled their product meets the definition of illegal gambling under state law. [private]

Madigan yesterday issued letters to both operators requesting they withdraw from the state “until the Illinois General Assembly passes legislation specifically exempting DFS contests” from the Criminal Code.

Madigan’s ruling came off the back of enquiries from Rep. Elgie Sims Jr and Rep. Scott Drury – the chair and vice chair of the House Judiciary – Criminal Committee – into the legality of DFS.

The AG noted the legality of daily fantasy sports was “a matter of first impression” as their status under state gaming law had never been considered.

The state’s Criminal Code blocks the playing of both games of skill and chance for money, but FanDuel and DraftKings believe they are operating legally under an exception in the law.

The clause states participants in the following shall not be convicted of gambling:

“Offers of prizes, award or compensation to the actual contestants in any bona fide contest for the determination of skill, speed, strength or endurance or to the owners of animals or vehicles entered in such contest.”

But Madigan said the carve-out did not apply to DFS because the exemption applies only to the “actual contestants” in the actual sporting event.

“In the context of daily fantasy sports, the “actual contestant” upon whose performance success or failure is based is the athlete or athletes whose “skill, speed, strength or endurance” determine the outcome,” she noted.

“Absent legislation specifically exempting daily fantasy sports contests from the gambling provisions, it is my opinion that daily fantasy sports contests constitute illegal gambling under Illinois law,” she added.

Reacting to the ruling, DraftKings said it “respectfully disagrees” with Madigan’s opinion and the reasoning behind it, and will “promptly seek a judicial resolution” to continue offering contests to Illinois players.

“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,” the operator added.

FanDuel said the ruling was “beyond us” and that it hopes the legislature will “give back to the people of Illinois the game they love”.

The ruling comes as FanDuel and DraftKings are locked in a fierce battle with the New York Attorney General, who recently reached a similar conclusion to Madigan and issued cease and desist letters to both operators.