Madigan: Daily sports fantasy betting is illegal gambling – Chicago Tribune

Online fantasy sports contests offered by FanDuel and DraftKings “clearly constitute gambling” and are illegal under state law, Illinois Attorney General Lisa Madigan said in an opinion issued Wednesday.

Madigan’s 15-page opinion noted that the criminal code “prohibits the playing of both “games of chance or skill for money.'”

“Participants (in the online fantasy leagues) must pay an entry fee or buy-in amount in order to win a prize. Consequently, the act of playing daily fantasy sports contests in Illinois constitutes illegal gambling,” Madigan wrote in her decision, which she sent legislators.

Madigan is asking the companies to add Illinois to the list of states whose residents cannot participate in the contest, “unless and until” legislation is passed to exempt daily fantasy sport contests from “the criminal prohibition on gambling.”

Madigan’s determination follows similar decisions in other states. New York Attorney General Eric Schneiderman in November said that after a one-month investigation his office had concluded that the daily contests are essentially games of chance, not skill. Schneiderman ordered DraftKings and FanDuel to stop operating, but the companies won a temporary reprieve allowing them to continue through January. Madigan’s opinion made no such orders.

Nevada regulators declared the entities promote illegal gambling and ordered the sites out of the state unless they acquire gambling licenses.

Madigan said in her decision that while the fantasy league companies describe clients as “actual contestants” and the contests may involve some “degree of skill” in selecting an athlete for a fantasy team, the players do not have any control or influence to determine the outcome of the game.

“Persons whose wagers depend upon how particular, selected athletes perform in actual sporting events stand in no different stead than persons who wager on the outcome of any sporting event in which they are not participants,” Madigan wrote.

State Rep. Mike Zalewski, D-Riverside, in October introduced legislation to legalize betting on the fantasy league contests. He said in a statement Wednesday that Madigan’s opinion gives the matter “clarity” as he moves forward with legislation to “provide the necessary strong consumer protections for “safe, fun play.”

“While I do not believe daily fantasy sports involve gambling, I have explained my concern from the outset of my work that Illinois law is unclear on this issue,” Zalewski said in a statement.

Democratic Reps. Scott Drury, of Highwood, and Elgie Sims, of Chicago, sought the opinion from Madigan’s office. Drury said not only did taxpayers need to know whether the contests were legal, lawmakers needed to know what they are attempting to regulate.

“To me, it didn’t make sense to consider legislation when we didn’t know what the current status of daily fantasy sports is in Illinois,” Drury said. “Now that we know, according to the attorney general, that it’s illegal, we can make a serious attempt to address the issue.”

Drury is not a fan of Zalewski’s proposal, saying the minimum age of 18 is too young and that rules are too loose on winners who owe child support or tax money. Zalewski said he aligned parameters with current gambling regulations on riverboat casinos and horse racing.

In a statement, FanDuel said “why the Attorney General would tell her 13.5 million constituents they can’t play fantasy sports anymore as they know it — and make no mistake, her opinion bans all forms of fantasy sports played for money — is beyond us.”

David Boies, counsel to Boston-based DraftKings, another large operator, said in a statement that the company intends to “seek a judicial resolution” of the matter.

“As it does so, it will continue to abide by all relevant laws and will follow the direction of the courts,” Boies said. “Pending that resolution the company will preserve the status quo.”

Daily fantasy sports differ from the traditional model in that contests are organized around short periods — a week, or a day — instead of a season. Players compete for a predetermined prize by assembling virtual teams of real pro or college athletes; winners are determined based on the statistics those athletes compile.

Tribune wire services contributed.

csadovi@tribpub.com

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