DFS Sites DraftKings, FanDuel Withdraw from Alabama, Idaho
After some recent good news on the daily fantasy sports (DFS) front, it is now time to get back to the bad. Last week, two states lost the big DFS sites: Alabama and Idaho.
The departure of DFS leaders DraftKings and FanDuel from Alabama was expected. In early April, Alabama Attorney General Luther Strange made the determination that DFS was illegal according to state law and issued cease and desist letters to both sites. He gave them until May 1st to stop offering paid fantasy games to residents of the state.
In his press release, Strange said, “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.”
He then took that to its logical conclusion:
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. For example, a player could fall ill before a game, be injured in pre-game warm-ups, or miss a large portion of the game due to injury or equipment failure. All of these factors, and many more, are outside the control of a fantasy sports player. Thus, 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.
Thus, DraftKings and FanDuel pulled out of Alabama last week, in accordance with Strange’s order. On its website, FanDuel issued a statement to its customers, saying, in part:
We believe FanDuel has always operated within the law in Alabama. The Alabama Attorney General, however, recently demanded that we cease offering our paid fantasy sports contests in Alabama. Accordingly, we will no longer offer paid contests in the state as of today. As has always been the case, users in Alabama can withdraw their funds at any time.
We regret this development for our Alabama players, and will be working hard to clarify the law in Alabama with the aim of bringing our contests back to the state at some point in the future. If you would like to support our legislative efforts, please sign up at https://fantasysportsforall.com/alabama/ and ask local lawmakers to stand up for your right to play fantasy sports.
DraftKings’ and FanDuel’s decision to stop offering their products in Alabama comes just a day after the state’s northern neighbor, Tennessee had a DFS legalization bill signed by the governor.
Up in Idaho, that state’s Attorney General, Lawrence Wasden, came to a similar conclusion as Strange, deciding that DFS violating his state’s gambling laws. Prior to issuing a press release to announce his decision, Wasden said he negotiated for three months with DraftKings and FanDuel, the end result of which was an agreement in which they would withdraw from Idaho by May 1st.
“The concern I have is that the paid daily sports offerings provided by these companies constitute gambling under Idaho law,” Wasden said in his press release. “I have a duty to enforce and uphold that law. I commend the companies for negotiating in good faith and agreeing not to make these contests available in Idaho.”
Wasden supposedly “began a review of the companies and their websites in January” to determine if they were illegal in Idaho. Hopefully he didn’t spend much of that third of a year on the project, as their legality seems pretty cut and dry based on how he says the law is written:
Idaho defines gambling, in part, as risking money or other thing of value for gain that is contingent in whole or part upon chance or the outcome of an event, including a sporting event. My concern is that the daily fantasy sports offerings my office reviewed require participants to risk money for a cash prize contingent upon individual athletes’ collective performances in various future sporting events. As I see it, this falls within Idaho’s definition of gambling.
I am a fan of fantasy sports and think they should be legal all over the place, but yes, they are gambling. It really isn’t all that difficult to figure out. Shockingly, poker is gambling, as well.
DraftKings and FanDuel are still permitted to offer free fantasy games in Idaho and may offer real prizes, if they so choose.
AG Wasden also noted that the companies could resume offering real money, paid fantasy sports in Idaho if either the state legislature amends the current gaming law to allow for DFS or if a court rules that DFS contests are permissible. If the companies want to offer DFS contests again, they must give the Attorney General 30-days notice so that he can review the games they want to offer.