On Wednesday, Illinois Attorney General Lisa Madigan said that DFS, or daily fantasy sports, is illegal gambling under Illinois law.
This decree follows decisions in New York and Nevada where online sites were banned for the same reason.
DraftKings and FanDuel under the radar
DFS is a type of online gambling where contests are organized around short periods, such as week, or a day, and differs from traditional models where contests run through the whole 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.
This type of online wagering is very similar to daily fantasy eSports, which uses the same model with the exception that players assemble teams from professional gamers instead of athletes. Both types go under the same roof when it comes to legality of gambling.
Both DraftKings vs FanDuel (which acquired esports betting site AlphaDraft earlier this year) received a letter from Madigan’s office stating that the two companies are expected to amend their terms of service to include Illinois as a prohibited state. As of Thursday evening, FanDuel’s terms of service listed Arizona, Iowa, New York, Louisiana, Nevada, Montana, and Washington as prohibited states.
DraftKings lists Arizona, Iowa, Louisiana, Montana, Nevada and Washington as prohibited states. Illinois was not listed.
“Chicago may be the best sports town in the country. It’s a city, and Illinois is a state, that plays fantasy sports like almost no other. ‘The League’ is even set in Illinois. So 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,” FanDuel said in a statement.
“Hopefully the legislature will give back to the people of Illinois the games they love. A sports town like Chicago and a sports loving state like Illinois deserves nothing less.”
David Boies, counsel to Boston-based DraftKings, 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.”
According to industry research firm Eilers Research, Illinois has the third-most daily fantasy players in the nation, with New York and California being the only two ahead of the state.
eSports betting endangered
“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.
News as such, where online gambling gets more and more limited, are bad for the future development of a young industry like esports betting. Even though some companies have managed to overcome this problem by offering betting with a virtual currency, the limitation for expanding gambling products to other areas is bad for business.
The battle rages on
Democratic state Rep. Mike Zalewski, a supporter of legalization and regulation of such contests, said that while he disagrees that the pastime involves gambling, the recent ruling provides “more clarity.” Zalewski said in a statement that he’s aiming for regulations “to allow Illinoisans to continue to play these contests and provide the necessary strong consumer protections for safe, fun play.”
Scott Drury, another Illinois state representative, sought the Illinois opinion. Drury said not only did taxpayers need to know whether the contests were legal, but lawmakers also 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.”
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