DraftKings and FanDuel will stop taking customers from Alabama, complying with cease and desist letters sent by the state attorney general earlier this month.
It comes just a day after a victory for daily fantasy sports in another state, Tennessee. The governor of that state, Bill Haslam, signed a bill legalizing and regulating DFS.
What we know so far about Alabama
Alabama Attorney General Luther Strange issued a press release on April 5 about his letters to the two major DFS operators. From the release:
Alabama Attorney General Luther Strange today announced that he has issued cease and desist letters to DraftKings and FanDuel after reviewing Alabama’s gambling statutes and determining that paid daily fantasy sports contests constitute illegal gambling. DraftKings and FanDuel have until May 1, 2016, to cease offering paid daily fantasy sports contests in Alabama.
His argument? He contends, like many attorneys general, that “paid daily fantasy sports contests are in fact illegal gambling under” state law.
DraftKings confirmed via a statement to Legal Sports Report that it was leaving the state:
“While we disagree with the Attorney General’s conclusions and know that DFS players join in our disappointment that we are ceasing operations in Alabama, we look forward to continued and constructive engagement with state legislators. DraftKings is working with lawmakers across the country to enact fantasy sports legislation, so that our loyal fans can continue to enjoy the games they love.”
FanDuel confirmed it was also exiting the state, and later posted a note to users in its “newsroom.” The statement there says, in part:
We believe FanDuel has always operated within the law in Alabama. The Alabama Attorney General, however, recently demanded that we cease offering our paid fantasy sports contests in Alabama. Accordingly, we will no longer offer paid contests in the state as of today. As has always been the case, users in Alabama can withdraw their funds at any time.
A call to the press office of the Alabama AG was not immediately returned.
Both DraftKings and FanDuel have added Alabama to their list of blocked states in their respective terms of use (here and here). Anecdotal reports indicate that both sites have started informing customers.
It’s expected that other DFS sites that had stayed in the Alabama market will also leave, in the wake of this news.
Other states where DraftKings and FanDuel don’t operate
The number of states where the two sites do not operate has doubled in the past six months.
Early in 2015, they both served 45 states; neither accepted users where state law on DFS legality is clear-cut:
- Louisiana
- Washington
- Iowa
- Montana
- Arizona
In the past six months, both have left four other states, in addition to Alabama:
- Nevada
- New York
- Mississippi
- Hawaii
The only point of divergence between the two DFS operators is Texas. FanDuel is set to leave the state by May 2 after reaching a settlement with the attorney general there, Ken Paxton. DraftKings, meanwhile, filed suit against Paxton in court.
Mississippi could be added back to the list of states they serve if the governor, Phil Bryant, signs a bill currently on his desk.
DraftKings and FanDuel likely avoided having to leave Tennessee after a law was passed yesterday; that state’s AG also offered an opinion that DFS is illegal gambling.
Legislative answer not coming now in Alabama
Alabama had two active bills regarding the legalization and regulation of DFS. However, the bills have not made any progress in the past two months, and both now have a status of “indefinitely postponed” on the legislative website.
The House version of the bill came up in front of the full chamber in March but was sidelined after a contentious debate on the floor.
The Alabama legislature is expected to adjourn on May 4.
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