DFS illegal in Alabama and Tennessee, say Attorney Generals

Attorney Generals in each state have opined that daily fantasy sports meets the definition of illegal gambling

Alabama and Tennessee have become the latest states to rule the offer of daily fantasy sports (DFS) is illegal under their respective gambling laws. [private]

Alabama Attorney General Luther Strange served FanDuel and DraftKings with cease and desist letters on Tuesday, giving both operators until May 1 to exit the state.

In a statement, Strange said that DFS operators claim they operate legally under state law, however paid DFS contests “are in fact illegal gambling.”

“In Alabama, an activity constitutes illegal gambling if a person stakes something of value on a contest of chance, even when skill is involved, in order to win a prize,” Strange said.

“There is, of course, a measure of skill involved in creating a fantasy roster. But in the end, contestants have no control over the performance of the players on their rosters.

“The results of paid daily fantasy sports contests depend to a large degree on chance. This is the very definition of gambling under Alabama law,” he added.

Tennessee Attorney General Herbert Slatery published his opinion the following day, and also ruled that DFS was illegal gambling under state law.

Slatery was responding to a request from House Minority Leader Craig Fitzhugh to answer the question: Do fantasy sports contests constitute illegal gambling under Tennessee law?

Slatery noted that participants pay an entry fee in order to win a prize, and that those fees comprise the prize fund.

“By proffering these entry fees, participants agree to risk something of value for a profit – a portion of the pot,” he said.

“The only remaining consideration is whether a participant’s ability to win a fantasy sports contest is to any degree contingent on chance.

“While participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance,” Slatery added. 

The AG did say, however, that the state legislature had the power to pass legislation that would exempt daily fantasy sports from gambling law.

Bills seeking to legalize DFS are making progress in both states, with legislation in Tennessee having already passed through the Senate.