Daily fantasy sports operators DraftKings and FanDuel have filed motions to dismiss cases they brought to clarify their status under Illinois law.
What’s new in Illinois DFS?
The companies have had an active case dating back to 2015, related to an opinion from Attorney General Lisa Madigan that said that DFS contests were illegal under state law. FanDuel, DraftKings and most other operators stayed in the state despite that opinion.
The AG actually did not start the legal action, as FanDuel and DraftKings sued to have the courts say DFS is in fact legal. Madigan then filed a motion to dismiss the case, saying that there was nothing for the courts to determine as a matter of law after she issued her opinion, which doesn’t carry the force of law.
FanDuel
You can see the case docket here, which shows the motion made by FanDuel, which issued this statement to Legal Sports Report,
FanDuel filed a motion to voluntarily dismiss without prejudice its 2015 lawsuit against the Illinois Attorney General, which followed her issuance of an advisory opinion about fantasy sports. During the course of the litigation, the Attorney General asked the court to dismiss the case on the basis that her opinion was advisory and not “subject to enforcement in a court of law.”
In the two-plus years since the lawsuit was filed, 19 states, including some of the ones cited in the Attorney General’s opinion, have passed legislation regarding fantasy sports contests, finding them to be lawful contests of skill. Accordingly, we determined that dismissal is appropriate.
DraftKings
There is currently no similar motion from DraftKings on the docket. But DraftKings issued this statement to Legal Sports Report, via R. Stanton Dodge, its chief legal officer:
DraftKings filed a motion to voluntarily dismiss our lawsuit against the Illinois Attorney General, without prejudice. The Attorney General took the position in the case that her opinion was advisory, non-binding and not “subject to enforcement in a court of law.”
Since the lawsuit was filed in 2015, nineteen states have enacted common sense fantasy sports laws confirming that our products are lawful contests of skill. For those reasons and others, we decided to dismiss the case. DraftKings will continue to offer innovative and exciting daily fantasy sports products to our customers in Illinois.
The backstory of DFS and Illinois
- Madigan issued her opinion on the legality of DFS in December 2015, declaring that contests ran afoul of state gambling law and asking the top two DFS operators to add Illinois to a list of excluded states in their terms of use. She took no further action to enforce that opinion, however.
- The next day — Christmas Eve — FanDuel and DraftKings filed suit in separate Illinois courts to have the courts rule that DFS is indeed legal in the state.
- Illinois has tried in each of the past two years to give DFS legal clarity via bills in the legislature. But those efforts have come up short.
Here is a look at the legal arguments on both sides regarding DFS vis a vis state law.
Why now in Illinois?
Why the motions to dismiss came now is a matter for speculation. The court case is now more than two years old, and it hasn’t really gone anywhere.
At the time the case began, the DFS industry was under fire from numerous avenues. That included New York, where Attorney General Eric Schneiderman actually told DraftKings and FanDuel to cease and desist operations there. In 2016, the sites were able to get a law on the books to regulate and legalize paid-entry fantasy sports.
Indeed, fantasy sports laws have sprung up around the country, as Dodge mentioned.
Success has been more difficult to come by in Illinois, where gaming interests have pushed back against fantasy sports bills. The Senate passed an online gambling and fantasy sports bill last year, but there hasn’t been any movement so far in 2018.
Getting some closure on the ongoing case could, in theory, help bolster the legislative effort. The AG standing aside and letting the motion to dismiss go through would make it look more like the sites never operated illegally in Illinois.
The timing would also seemingly play into the narrative that FanDuel is trying to clear the decks before a potential sale. It does not have an active case in Texas on its legality, after a 2016 settlement. That’s unlike DraftKings, which still has an active case involving that state’s AG.
