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Alabama’s AG said that its office issued cease and desist letters to DraftKings and FanDuel yesterday.
After Tennessee, 20% of the state’s AGs have now issued negative opinions about DFS.
The opinion actually applies to all paid-entry fantasy sports, not just DFS. That includes season-long fantasy.
According to the document from the office of AG Herbert Slatery, the opinion was requested by Tennessee House Minority Leader Craig Fitzhugh.
It starts with a simple declaration:
Do fantasy sports contests constitute illegal gambling under Tennessee law?
The opinion, following the many examples in states before it, examines DFS vis a vis the state’s gambling laws. The conclusion is that DFS is covered by those laws:
Fantasy sports contests fall within the broad definition of “gambling” under Tennessee Code Annotated § 39-17-501(1). The participants pay an entry fee in order to win a prize. A portion of the fees comprise the pot of funds that are paid out to the winning participants. By proffering these entry fees, participants agree to risk something of value for a profit – a portion of the pot.
Hence, the only remaining consideration is whether a participant’s ability to win a fantasy sports contest is to “any degree contingent on chance.” While participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance. Namely, the participants do not control how selected athletes perform in actuality on a given day. Athletes’ performances are affected by many fortuitous factors – weather, facilities, referees, injuries, etc.
The opinion did say the legislature could act on the DFS front:
Thus, absent legislation specifically exempting fantasy sports contests from the definition of “gambling,” these contests constitute illegal gambling under Tennessee law. The General Assembly has the power to exclude from the definition of “gambling” any fantasy sports contest that is not prohibited by the state constitution or the federal constitution.
You can read the entire opinion here.
While opinions have come in many states, Tennessee’s state laws have always been considered a state where DFS was truly operating in a poor legal environment.
Some of the smaller operators had voluntarily stayed out of the state well before this opinion.
It also continues a growing trend of Southern state AGs identifying DFS as a gambling product.
Tennessee is one of the states that that is furthest along on legislation.
A bill has already passed the Senate; the House version of the bill was actually scheduled for a committee hearing on Wednesday. According to a developing story at The Tennessean, that committee delayed action on the bill for another week.
Tennessee is on the clock to get the bill passed into law, however. The legislature is scheduled to adjourn on April 15.
It’s unclear if this opinion will have any effect on the legislative process in Tennessee, like a similar opinion apparently did in Georgia.
DraftKings issued this statement in the wake of Wednesday’s developments:
“We have been and are in an active dialogue with elected officials to advance thoughtful and appropriate legislation that includes consumer protections to govern our skill-based contests and are encouraged by our progress to date in Tennessee. We call on all of our fans and Tennessee supporters to let their voices be heard in the coming days to show support for this legislation and protect their right to play the games they love.”