The office of Georgia’s attorney general believes daily fantasy sports constitute illegal gambling under state law, according to a letter obtained by the Atlanta Journal-Constitution.
Legal Sports Report obtained a copy of the full letter, which can be read here.
Georgia becomes the seventh state in which an AG’s office has reached this conclusion; eight, if you include Nevada, where it has been deemed gambling requiring a license.
The letter does not constitute a “formal opinion” about the legality of DFS that has been issued in a variety of other states.
A regulatory effort in the state seems to have been scuttled as a result, as well.
What the AG’s letter says about DFS
A letter from a deputy AG in Georgia, Wright Banks Jr., was written to the Georgia Lottery, according to the AJC. In it, Banks dismisses both the “skill game” and “actual contestant in a game of skill” arguments advanced by DFS operators in other states:
In daily fantasy sports, a participant whose purported skill level has not changed from one game to the next is just as likely to win one tournament, then lose the next tournament due to the performance of players outside of the participant’s control.
And later, on the exclusion in Georgia allowing prizes for “actual contestants” in a contest of skill:
The purpose of the exclusion is to allow athletes competing in the sporting events to be rewarded for their efforts, not for people to receive compensation for betting on the outcome of those events or the performance of a particular athlete…
Banks offers at the end of his letter that this is his “informal advice.”
DraftKings’ reaction
DraftKings offered the following statement via one of its lawyers, Randy Mastro:
“We are disappointed that the Georgia Lottery Corporation is seeking to bar Georgia citizens from continuing to enjoy the fantasy sports they love.
There is no legal or other basis for depriving Georgians of this popular recreational activity. DFS is a legitimate business activity that has operated openly and permissibly in Georgia for years. It is the citizens of Georgia, through their elected representatives, who should decide whether they can continue to enjoy fantasy sports.
DraftKings will therefore support legislation that regulates fantasy sports with thoughtful and appropriate consumer protections, and we urge Georgians to tell their elected representatives that they want to be able to continue to enjoy fantasy sports. “
The backstory of DFS in Georgia
The lottery, dating all the way back to October, had wondered aloud how DFS was legal under state law. That’s when it sent letters to both DraftKings and FanDuel asking them about their legal arguments for operating in Georgia. The letter can be seen here.
The interest in DFS from the AG’s office dates back to at least November, when AG Sam Olens indicated his office was investigating DFS. Whether the letter reported by the AJC is the sum total of the AG’s interest is unknown.
More weight on the scale on “actual contestant”
The idea that DFS players are “actual contestants” in a contest of skill is one of the major tenets of operators’ defense of legality. And it’s one that has now been dismissed by a number of AG’s:
- Texas AG: We concluded that, although the “exclusion may embrace athletes actually competing in the sporting events you refer to, it does not embrace those who pay entry fees for a chance to win a prize from forecasting the outcome of the events.”
- Illinois AG: Reading the statute as a whole, it is clear that subsection 28-1(b)(2) applies only to the “actual contestants” in the actual sporting event. In the context of daily fantasy sports, the “actual contestant” upon whose performance success or failure is based is the athlete or athletes whose “skill, speed, strength or endurance” determine the outcome.
- Mississippi AG: “Participating in foosball and pool tournaments is not prohibited … but that betting on such games would be.”
The Georgia legislative effort on DFS
It appears that a DFS regulatory bill that recently made it past a Senate committee vote — S 352 — is shelved for the time being. The AJC said the bill had been “dropped to the bottom of the Senate calendar” and a later story said the Senate “decided not to take up a bill” on Monday.
Today was the last day for bills from one chamber to advance to the other — called “Crossover Day” in Georgia — meaning it appears the DFS bill is dead in Georgia for now.
It’s difficult to believe that the AG letter coming to light and the fact that the DFS bill not come up for a vote are unrelated.
Also of note: A House bill that would have allowed for casino-style gambling also failed to move on Crossover Day.
