Christmas and New Year’s offered little respite regarding legal and regulatory issues for daily fantasy sports sites DraftKings and FanDuel, while the first week of the new year could be the industry’s most crucial in 2016.
A challenge to the legality of DFS in Illinois continued; New York’s attorney general expanded his battle against the sites; and California will face a key moment for regulatory efforts.
Here’s what went down in recent days, and a look at what’s to come this week.
Illinois
Just after Illinois attorney general Lisa Madigan declared her opinion that DFS constitutes illegal gambling under state law, DraftKings and FanDuel filed suit to have the courts say that DFS is in fact legal.
Unlike the ongoing case in New York, DraftKings’ and FanDuel’s cases will not be linked.
DraftKings’ case will take an “expedited” schedule, with the AG responding by January 22. A trial won’t take place until June. The full schedule from DFS legal analyst Daniel Wallach:
Court deadlines in #DraftKings vs. Illinois AG:
1/22 – Response to Complaint
4/27 – Discovery deadline
5/07 – S/J Motions due
6/27 – Trial— Daniel Wallach (@WALLACHLEGAL) December 29, 2015
You can read DraftKings’ filing here.
Randy Mastro, counsel to DraftKings, offered this in a written statement:
“In the wake of yesterday’s advisory opinion from the Illinois Attorney General, we filed suit today to ask a court to declare daily fantasy sports legal under Illinois law, and to do so on an expedited basis, so that the hundreds of thousands of Illinois fans who have played DFS openly and honestly for nearly a decade will know they can continue to enjoy the fantasy sports games they love.”
Meanwhile, FanDuel is suing jointly with Head2Head Sports — a seasonlong fantasy sports provider — and its case will take a separate track.
Both sites continue to operate in Illinois, and presumably will until the case is resolved in court.
New York
The situation for DFS in New York ramped up yet again, as AG Eric Schneiderman is now looking to the courts to have DraftKings and FanDuel give back all the money that they have made in the state.
The filings — made on New Year’s Eve — now ask the court to direct FanDuel and DraftKings:
- “To pay damages caused, directly or indirectly, by the fraudulent and deceptive acts and repeated fraudulent acts and persistent illegality complained of herein”
- “To make restitution of all funds obtained from consumers in connection with the fraudulent, deceptive, and illegal acts complained of herein.
- “To pay a civil penalty of up to $5,000.00” for each case.
The amended complaint against DraftKings here, FanDuel here.
DraftKings counsel David Boies offered this statement after the NY AG’s action.
The Attorney General’s revised complaint reveals that the Attorney General’s office still does not understand fantasy sports. Like the NYAG original complaint, it is based on the fundamental misunderstanding of fantasy sports competitions. Originally, the NYAG claimed that daily fantasy sports were illegal gambling because they were games of chance. That was disproven.
Now, the NYAG complains that DFS contests are so much contests of skill that some advertising is misleading because, the NYAG says, certain ads imply that DFS contests are games of chance. This claim, too, is baseless.
Meanwhile, an appellate court will hear arguments on Monday regarding a temporary stay of a preliminary injunction against DraftKings and FanDuel. A victory would allow the sites to continue operating in the state, for the time being. A loss would likely mean the operators would have to exit New York.
Finally, payment processor Vantiv is seeking legal clarity from New York, regarding its relationship with DraftKings.
California
Less than a month after a legislative committee hearing was held on the subject of DFS, the same committee will consider a DFS regulatory bill, and could vote on it.
The bill will be considered along other possible gambling expansions in the state — namely online poker and sports betting.
In last month’s hearing, there appeared to be minimal opposition to the idea of regulating DFS, but considering an actual bill will provide more insight from lawmakers, as well as gaming stakeholders in the state, such as tribes and race tracks.
The bill will be considered with the looming possibility of Attorney General Kamala Harris offering an opinion on the legality of DFS.
