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Alabama Attorney General Luther Strange announced Tuesday that his office has found daily fantasy sports to constitute illegal gambling and that he has issued cease and desist letters to DraftKings and FanDuel.
Strange becomes the ninth attorney general to come to a similar conclusion about the legality of DFS vis a vis state law.
Strange’s office issued a press release late in the day on Tuesday, saying that DraftKings and FanDuel have until May 1 to pull out of the state.
DraftKings and FanDuel did not immediately have a statement on the developments in Alabama, nor did either company indicate their intent to continue to accept players in the state or not.
Unlike some other states, the AG did not issue a full, formal opinion on the legality of DFS. Tuesday’s press release did mirror the opinions of several other AGs that chance plays large enough of a role in DFS contests to be illegal under state law:
From the press release:
“As Attorney General, it is my duty to uphold Alabama law, including the laws against illegal gambling,” Attorney General Strange said. “Daily fantasy sports operators claim that they operate legally under Alabama law. However, paid daily fantasy sports contests are in fact illegal gambling under Alabama law.”
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. …
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.
Alabama is the latest of many attorney generals to weigh in on DFS; most of them have had a negative view:
While neither DFS operator has spoken so far, what they might do is unknown as of now.
Even a few months ago, the playbook would have been to issue a statement decrying the AG’s action, and possibly fighting it in court. However, the sites have been more cooperative in recent weeks and months, reaching a settlement in New York, pulling out of Mississippi, and leaving Texas (in the case of FanDuel, only).
Alabama is the only state, other than New York, to actually issue cease and desist orders (at least that is known to the public).
Alabama is a relatively small market, with a population of 5 million, so the loss of the state would not be crippling to the industry. At the same time, losing another state obviously would not be ideal.
Alabama is one of more than two dozen states that have been pursing a legislative answer for legalizing and regulating DFS.
A House version of a bill was passed out of committee to the full House of the floor. After amendments and debate early in March, the bill has seen no progress in more than a month, and it never came up for an up or down vote. A Senate bill has seen no action since Febraury.
The legislature is set to adjourn in May, so there is still time to get a bill to the finish line. Indiana and Virginia have already passed laws this year to legalize DFS.