With state attorney generals banning daily fantasy sports once a month or so in the United States these days, somebody wanting to play DFS needs an up-to-the-minute scorecard. This article is a snapshot of the legal status of daily fantasy sports across the United States, as the year turns from 2015 to 2016.
Daily fantasy sports had one of those meteoric rises that happens occasionally in the American pop culture. Like most meteoric rises*, the fall of daily fantasy sports appears to have been just as dramatic. All it took was one-half of one NFL season for the hobby to become a hot-button issue with politicians and appointed officials.
I’ll save a detailed explanation of why DFS is facing troubles, though I’ll provide a quick synposis. FanDuel launched in 2009, taking advantage of a provision in the UIGEA which exempted fantasy sports from federal gambling laws. DraftKings launched in 2011. From that time until 2015, the two companies have been in a competition to see who would be the #1 DFS service in the country.
They started to collect hundreds of millions of dollars in investment from media corporations and Wall Street hedge funds, which feuled an advertising blitz in 2015. Sports viewers got tired of the commercials, but DraftKings and FanDuel saw their signups increase dramatically. DFS became mainstream, but annoying to some. In October 2015, a DraftKings employee won 2nd place and $350,000 in a FanDuel contest, then mistakenly posted draft percentage information to his Twitter account. This caused a controversy over whether he used DraftKings starter data to gain an advantage in the FanDuel contest.
In the following week, the public was horrified to learn they were competing against employees who might-or-might-not have had an advantage. One publicity-seeking lawyer from Florida was quoted in the New York Times saying the incident was akin to insider trading. Officials in Nevada, Florida, New York, Massachusetts, and Illinois said they would look into the practices of the main DFS companies. At least 13 class-action lawsuits were filed by current and former customers of those services, including one from a state where daily fantasy sports was illegal. The much-feared Preet Bharara said he would launch an investigation. In effect, a massive public relations and legal dogpile happened.
Which U.S. States allow Unrestricted Daily Fantasy Sports Gaming?
Which brings us to the present. Three states have banned DFS gaming in the past 3 months. Five U.S. states had restricted gaming before that time.
Below is a scorecard of states where DFS is illegal, along with details why.
As the legal status of one-day fantasy contests change in America, I’ll try to update this page.
Illinois Attorney General Bans DFS – December 2015
On December 23, 2015, Illinois Attorney General Lisa Madigan banned daily fantasy sports in her home state, pending legislation. Her legal opinion said, “Absent legislation specifically exempting daily fantasy sports contests from the gambling provisions, it is my opinion that daily fantasy sports contests constitute illegal gambling under Illinois law.”
In other words, whether DFS is a game of skill or a game of luck, it is illegal to play fantasy sports in Illinois — all fantasy sports. That means your local fantasy footbal league is illegal. The silver lining is the Illinois state legislature does have bills which would legalize fantasy sports in the state. That bill is going to pass sometime in 2016. It is the job of DraftKings and FanDuel to lobby Illinois lawmakers to make sure “daily fantasy sports” is given an exemption alongside your local fantasy league.
Stay tuned for more developments on Illinois gaming laws.
New York Attorney General Bans Daily Fantasy – November 2015
On November 11, 2015, New York Attorney General Eric Schneiderman sent a cease-and-desist order to DraftKings and FanDuel, saying DFS is gambling and they had 5 days to stop accepting real money transactions from the State of New York. Schneiderman’s actions were a result of a hastily-announced probe launched in October 2015, just after the Ethan Haskell fiasco began.
Schneiderman’s original press release was a sensational shot-across-the-bow to the daily fantasy sports industry, which said (among other things), “DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.”
That press release caused New York Representative Chris Collins (of the 27th Congressional District) to tweet the following, “[Y]our decision on daily fantasy sports is another blatant grab for headlines @ the expense of New Yorker’s personal freedoms.”
Interestingly, Schneiderman targeted the two famous companes in the industry, but forgot to send letters to many other operators in the industry. Mondogoal and several other operators chose to leave the New York market. FanDuel and DraftKings sued the New York attorney general. That led to a hearing before New York State Supreme Court Judge Manuel Mendez, in which the two companies asked for a restraining order against Eric Schneiderman.
Judge Mendez rejected that request, effectively making it illegal to play daily fantasy sports in New York (circa January 2016). The companies filed an appeal to the New York Supreme Court, which will be heard in mid-January. Until then, New Yorkers will be able to enjoy daily fantasy sports. If the case goes against the fantasy sports industry, then people inside New York won’t be able to play in DFS contests.
Again, Eric Schneiderman banned all fantasy sports in New York, so if you’re playing fantasy football or fantasy baseball in New York state in 2016, it’s likely to be illegal. Once more, keep reading for the latest developments.
Nevada Gaming Control Bans DraftKings and FanDuel – October 2015
On October 15, 2015, A.G. Burnett of the Nevada Gaming Control Board announced he was banning daily fantasy sports in the state, unless the DFS company had a gaming license. On the surface, Burnett’s decision offered more leeway for the DFS operators, because it left open the door to submit and application and gain a gaming license.
It was a devil’s bargain AG Burnett provided the companies, though, because to submit an application, they would have to admit their hobby is gambling. In doing so, it would hurt their legal status in other US states.
A.G. Burnett’s statement said, “Since offering daily fantasy sports in Nevada is illegal without the proper license, all unlicensed activities must ceases and desist from the date of this notice. We’re not saying they can’t do (daily fantasy sports). We’re saying they can do this as long as they have a gaming license.”
In another interesting twist, the Gaming Control Board chairman suggested that Las Vegas sportsbooks could offer daily fantasy sports gaming, as long as they obtained a license to do so. Burnett warned those operators they “should exercise discretion in participating in business associations with daily fantasy sports operators that have not obtained Nevada gaming approvals.”
This is a situation I predict will work itself out. The DFS companies are starting to realize they’ll have to go down the road of full regulation, if their industry is to survive. Up until mid-October 2015, DraftKings and FanDuel insisted their contests were entirely legal. Part of the claim of legality was the fact their contests were games of skill. Over the past couple of months, their position has begun to change. They’ll eventually be forced to acknowledge DFS gaming is a betting in some form, and then they’ll apply for gaming licenses in Nevada. Whether they’ll be accepted is anyone’s guess, but I suspect A.G. Burnett will have to license them, if nothing untoward is learned in their background checks.
I have two reasons for believing what I say. One, DraftKings applied for a gambling license with the UK’s Gaming Commission earlier in 2015. That license was approved, so DraftKings official admits their hobby is gambling to the government of the United Kingdom.
Two, when Massachusetts Attorney General Maura Healey proposed a plan for DFS regulations in her state on November 19, both DraftKings and FanDuel gave their qualified approval of those regulations. In a little over one month’s time, they were starting to see state regulation of their industry as a lifeline. The worm is turning.
Fantasy Sports Is Illegal in Arizona
The State of Arizona has made it illegal to play fantasy sports in any form. DraftKings, FanDuel, Yahoo Fantasy Sports Daily, and StarsDraft all restrict play from Arizona. They have for a long time.
Like Iowa, Louisiana, Montana, and Washington, players can play in contests with no prizes, but if a prize is offered, the sites restrict them from entering those contests.
Fantasy Sports Gaming is Banned in Louisiana
Louisiana is the same way. According to a 1997 law, if you play fantasy football for real money in Louisiana, you are committing a crime under state laws. It is considered a form of sports betting, like filling out a parlay on NFL games would be. Those who play are subject to a $500 fine and up to 6 months in jail, though authorities have never enforced the 1997 law.
State Representative Joe Lopinto, a Republican from Metairie, introduced a bill (HB 475) on June 2, 2015 which would have made fantasy sports legal in his state. The bill passed in the House of Representatives by a 71-20 vote, meaning it had significant support. Lopinto pulled the bill in the State Senate when he realized he did not have the support there. Also, the bill likely would have been vetoed by social conservative Governor Bobby Jindal.
Fantasy sports might eventually gain legal status in Louisiana. After pulling his bill, Joe Lopinto said he might well reintroduce the proposal in 2016. He added, “Everything’s worth trying another year. New elections and terms limits bring new people and new ideas.”
All Fantasy Games are Illegal in Iowa
Iowa also banned fantasy sports a long time ago. Once again, this applies to fantasy football, baseball, basketball, hockey — whatever sport you want to name. Local leagues can have a $25 entry fee and that is considered illegal, under Iowa laws.
Fantasy Sports Banned in Montana
According to the website for the law firm Klein Moynahan Turco, “Montana state law specifically prohibits fantasy sports games played for entry fees (and prizes) over the Internet.”
I read the specific state law and it sure reads like fantasy sports in general is legal, which is probably a good reason why I wouldn’t be a good lawyer. Fantasy sports leagues appear to be legal, but if you play them online for entry fees and prizes, it is illegal.
In January 2015, State Representative Forrest Mandeville, a Republican from Columbus, introduced House Bill 181, which would have allowed for Internet-based fantasy contests. It is a shame the bill did not pass, because it is much more unlikely to pass in the wake of the Ethan Haskell revelations.
It should be noted that Montana is one of only four states which has legal sports betting, alongside Nevada, Oregon, and Delaware. Those four states were grandfathered into the Professional and Amateur Sports Protection Act (PASPA), which was passed by the US Congress in 1992 (and is now a source of contention for New Jersey). Unlike Nevada, Montana sports gambling is restricted to sports lotteries.
Washington State Disallows Online Fantasy Sports
For years, the State of Washington has not allowed online fantasy sports for money. From the beginning, none of the brand name DFS companies have allowed Washington residents to enter real money contests on their sites.
Susan Newer, the Washington State Gambling Commission’s rules coordinator and public information officer, said earlier this year, “Any DFS company operating in Washington or providing services to Washington residents would be illegal under state law. DFS has received some complaints and we follow up on all complaints. We do have investigations pertaining to DFS.”
The Washington State Gambling Commission had a public hearing to discuss fantasy sports in November 2015. It took place in Olympia on November 11. The meeting appears to have been to inform the public of the differences between yearly and daily fantasy sports contests, so it was not a pro-DFS hearing.
Washington has one of the most hardline stances against sports betting in the country, despite being a liberal state without a whole lot of social conservative viewpoints. Interestingly, one state politician introduced a sports betting legalization bill in 2015, but it went nowhere. DFS gaming is unlikely to be legal in Washington anytime soon.
More DFS Operator Restrictions
Besides DraftKings and FanDuel, other DFS operators restrict gaming in certain states. For instance, StarsDraft (formerly Victim) does not accept real money play in any US states, because its parent company, Amaya Gaming, is trying to behave itself. Amaya Gaming bought PokerStars in August 2014 for $4.9 billion, so it does not want to offend officials for the sake of its much less profitable Victiv/SportsDraft brand. Amaya bought Victiv in July 2015, but that was before all this legal mess.
Star Fantasy Leagues, another operator, restricts play in 49 states. If you live in Vermont, you can play for real money on Star Fantasy Leagues. Yahoo Fantasy Sports Daily and Fantasy Feud each restrict play in the same 6 U.S. states which FanDuel and DraftKings restrict. Fantasy Aces is the same, except it also restricts play in Tennessee. Fantasy Draft restricts play in New York, as does Draft Ops. Besides New York and the other six states, Draft Ops restricts play in Michigan.
The Michigan restriction makes sense, because the Michigan Gaming Control Board said in September 2015 that daily fantasy sports is probably illegal in their state. Florida is another tricky proposition, because a Tampa-area district attorney said he would launch a grand jury to see if DFS companies were committing crimes in Florida. For that reason, Yahoo announced recently it would not operate in Florida.
DFS Legality in the United States
As you can see, the legal situation of daily fantasy sports is complicated. That is the full rundown of the US states where one-day fantasy sports contests are restricted. Keep in mind that DraftKings and FanDuel do not use the word “illegal” when they say they are restricting gaming in a place. They still contend their games are legal — at least that’s their contention for now (in early 2016).