Maryland AG: Legislature ‘Should Clarify Whether Daily Fantasy Sports Are Authorized’

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The office of the Maryland Attorney General issued an advisory opinion on daily fantasy sports, urging the state legislature to clarify the law.

The office of the Maryland Attorney General issued an advisory opinion on the subject of daily fantasy sports, urging the state legislature to clarify existing law.

It’s the opinion of the attorney general that the state should not have passed a law in 2012 regarding fantasy sports without first conducting a referendum.

Background, and the DFS opinion in Maryland

In 2012, Maryland passed a law in which it appeared that it was explicitly making real-money fantasy sports legal, using language from the Unlawful Internet Gambling Enforcement Act.

But DFS was barely a blip on the radar when that law was passed, and with governmental scrutiny increasing in recent months, Maryland Senate President Mike Miller asked the AG’s office for an opinion on the industry, and specifically in regards to the 2012 law.

The DFS opinion letter

A letter signed by Assistant Attorney General Kathryn Rowe and Chief Counsel Adam Snyder on Friday came to the conclusion that DFS exists in a gray area of Maryland law, and advised the legislature to take up the matter in the current session.

From the letter:

However, due to the substantial uncertainty surrounding these issues and because the legislative history surrounding Chapter 346 suggests that the General Assembly did not focus on the regulation of daily fantasy sports in 2012, and could not realistically have considered daily fantasy sports as they exist today, we recommend that the Legislature squarely take up the issue this session and clarify whether daily fantasy sports are authorized in Maryland. By contrast, we think it is clear that traditional fantasy sports were authorized by Chapter 346.

You can read a full copy of the advisory opinion here.

Statement from the AG

After the opinion was publicly released, Attorney General Brian Frosh offered this statement on the opinion:

“The Office of the Attorney General was asked to provide advice on whether the General Assembly’s 2012 exemption of fantasy sports from criminal prohibitions on gambling should have been subject to voter referendum because it is an expansion of commercial gaming in Maryland.

The question triggers a complicated analysis of the nature and scope of gambling exemptions contained in the Maryland Constitution; the differences between Traditional Fantasy Sports and Daily Fantasy Sports and their evolution over time; and definitions of gambling and commercial gaming that are not found in Maryland law or court precedent.

We have ultimately concluded that the 2012 law should have been the subject of a referendum, but acknowledge that there are legitimate counter-arguments and that it is unclear how a court would rule if asked to address the matter. As such, we believe that the General Assembly should take up this issue to make legislative intentions known and to clear up ambiguity.”

DraftKings statement

DraftKings offered the following statement via counsel Jonathan Schiller:

“We agree with the Attorney General that this is a matter for the legislature. By an overwhelming majority, the Maryland General Assembly passed a law in 2012 that made it clear that fantasy sports, including daily fantasy sports, are not gambling and are legal in the state. We look forward to continued engagement with lawmakers to ensure that players in Maryland and around the country can continue to enjoy our contests.”

More from the opinion

Is DFS a game of skill or a game of chance? The AG’s office did not make that determination, vis a vis Maryland law, in the opinion letter:

We cannot predict with certainty whether a Maryland court would find that either TFS or DFS is a game of skill and therefore would not satisfy the “chance” requirement necessary to establish a violation of $ 12-102(a)(1) of the Criminal Law Article.

That uncertainty has both a legal and a factual component. Legally, it is difficult to predict how the Court of Appeals might rule with respect to the level of chance that is required to establish a violation of the law against betting, wagering, or gambling. Factually, it is difficult to draw broad conclusions with respect to the many different types of TFS and DFS formats available.

Also, like other states, DFS could constitute pool selling under state law, per the AG:

It is also our view that DFS might qualify as a “pool” or “bookmaking” under $ 12- 102(a)(2) of the Criminal Law Article. …

Given the liberal construction to which we must give our gambling laws, there are good reasons to believe that fantasy sports involved a”bet, wager, or gamble” under subsection (aX1) of that statute or a “pool” oÍ “book” under subsection (a)(2).

AG opinion comes after lots of Maryland chatter

For the past month, it had appeared that some action would be coming regarding the DFS industry in the state.

The Washington Post reported that State Comptroller Peter Franchot, Frosh and staff for Gov. Larry Hogan met in December to talk about DFS. Interestingly, Frosh was a legislator in 2012 and voted against the fantasy sports bill.

A committee hearing in the legislature was planned for December, but was pushed back as the aforementioned closed-door meetings took place.

So far, no legislation about DFS has been introduced in Maryland, although efforts to legalize and regulate the industry have popped in a variety of jurisdictions this year.

Like in many states, lobbyists for the fantasy sports industry have been deployed in an attempt to introduce friendly legislation.