DraftKings and FanDuel refuse to go gently into that good night. After Illinois Attorney General Lisa Madigan ruled that daily fantasy sports (DFS) equated to illegal gambling under state law, the two DFS industry leaders are gearing up for a fight, rather than withdrawing from the market.
Madigan cited a fairly simple-looking section of the Illinois Criminal code in her ruling, noting that the legality or illegality of DFS has nothing to do with whether or not it is a game of skill:
(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.
“The statutory language is straightforward and unequivocal,” Madigan wrote. “It clearly declares that all games of chance or skill, when played for money, are illegal gambling in Illinois, unless excepted. While the Contest Organizers assert that daily fantasy sports contests are games of skill’ rather than games of chance, that argument is immaterial because subsection 28-1(a)(1) expressly encompasses both.”
But both DFS sites still believe that their offerings are legal in Illinois and have filed complaints to counter Madigan’s ruling. DraftKings does not want to lose its fourth-largest market, but more than Illinois, the company sees this as a line in the sand that must be drawn. In its complaint, DraftKings said:
To be clear, this is about Illinois, but it is not just about Illinois. And that is what makes this precipitous action so pernicious and the stakes here so consequential. The Attorney General’s opinion, if left unchecked, will not only force DraftKings to exit the State, but also have a ripple effect, irreparably harming DraftKings’ operations throughout the nation and causing it to lose customer goodwill that can never be restored. Indeed, in suddenly declaring illegal an activity that has long been played lawfully, openly and honestly in this State, the Attorney General ignores the judicial and legislative processes already in motion, throws into turmoil the DFS industry, and affects the ability of Americans to play one of their favorite games.
Both DFS sites say that the skill-basis of the contests do matter under Illinois law, citing a portion of the criminal code that says those who participate in an activity that “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,” will not be convicted of illegal gambling.
Madigan said that was an invalid argument because DFS players are not the athletes on the field and therefore not the “actual contestants in any bona fide contest for the determination of skill.”
DraftKings, though, says, “DFS contests qualify for the exemption because they are ‘bona fide contest[s] for the determination of skill,’ because they are played by ‘actual contestants’ who compete for predetermined ‘prizes,’ and because the set-amount entry fees ‘contestants’ pay to DraftKings to participate in ‘contests’ are not ‘bets’ or ‘wagers.’”
Basically, DraftKings believes that the contests are the DFS games and the “actual contestants” are the DFS players, whereas Madigan believes the contests are the “real” sporting events played in stadiums and arenas and the “actual contestants” are the athletes.
In its complaint, FanDuel argues that Madigan’s ruling violates equal protection laws because she does not come out against season-long fantasy sports, even though the laws she cites seem to prohibit that type of fantasy game, as well. FanDuel even brought in season-long fantasy site Head2Head Sports as another plaintiff, showing that other sites are willing to go bat for DFS.
