Alabama and Tennessee can be added to the list of states with attorneys general who do not believe daily fantasy sports are legal under their state law. On April 5, 2016, the Alabama Attorney General issued a press release reporting he delivered cease and desist letters to FanDuel and Draft Kings. The two leagues have until May 1, 2016 to stop operating in Alabama. According the Attorney General Luther Strange, “paid daily fantasy sports contests are in fact illegal gambling under Alabama law.”
Tennessee Attorney General Herbert Slatery released an opinion on DFS in less than a day after Alabama. It states that “absent legislation specifically exempting fantasy sports contests from the definition of ‘gambling,’ these contests constitute illegal gambling under Tennessee law.” According to Slatery, participating in DFS is a punishable offense.
Slatery’s opinion takes a more expansive stance than Alabama, which focused on finding that operating daily fantasy sports was illegal. In Tennessee, the opinion declares any and all forms of fantasy sports that have entry fees are against the law. Slatery invokes the broad gambling law, which defines gambling “as risking anything of value for a profit whose return is to any degree contingent on chance. . .” Following this strict view on gambling, DFS would have a hard time arguing it is not “contingent on chance.” Until legislation is passed, DFS is absolutely illegal in Slatery’s view.
The Alabama and Tennessee Attorneys General join 11 other state attorneys general who have commented on the illegality of DFS under their state law. These states include Illinois, Vermont, Nevada, Mississippi, and Texas. Illinois is currently in court after Attorney General Lisa Madigan published an opinion on the illegality of DFS.
States are analyzing the illegality principal under a variety of strategies. In Texas, Attorney General Ken Paxton commented in an opinion that “it is prohibited gambling in Texas if you bet on the performance of a participant in a sporting event and the house takes a cut.” Thus, traditional fantasy sports are legal the leagues do not take a percentage of the winnings. However, the opinion focused mainly on “playing” instead of promoting. According to DraftKings, they will continue to stay in Texas.
Some attorneys general have published positive opinions of DFS, such as in Indiana, Kansas, Maryland, and Massachusetts. However, the negative reaction from so many states has overshadowed the wins. DFS is lobbying hard and asking its fans to contact their legislature in support of DFS.