Nevada’s Attorney General has released the full opinion that led to the state declaring daily fantasy sports (DFS) to be gambling; a document that uses the words of DraftKings CEO to support its conclusion.
On Thursday, Nevada gaming regulators ordered DFS operators to stop serving Nevada customers until they have obtained the necessary sports betting license. Both DraftKings and rival FanDuel, along with most of the DFS also-rans, have since announced they will no longer accept customers from Nevada.
The opinion (read it here) says the popular ‘skill v. chance’ argument was basically tossed aside at the outset, as under Nevada law this is “relevant only when analyzing lotteries.” As such, the opinion makes no attempt to establish whether or not DFS is a skill game, although it does suggest that DFS could represent an illegal lottery, depending on whose skill level is being assessed (the DFS players or the actual athletes).
The opinion similarly dismisses claims by some DFS proponents – which many mainstream media outlets have swallowed whole — that the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) ‘legalized’ fantasy sports. The opinion notes that the UIGEA “neither made legal nor illegal any form of gambling” in the US, but simply provided new ways to enforce existing online gambling laws, and is therefore irrelevant in determining DFS’ legality.
DFS does meet Nevada’s definition of a ‘sports pool,’ in that a wager is present, the wagering involves sports events and DFS operators are in the business of accepting such wagers. DFS also meets Nevada’s definition of a ‘gambling game,’ because the games rely on the use of electronic devices and are played for money.
The argument that DFS isn’t betting because determining winners involves multiple sporting events also falls flat, as the opinion notes that Nevada sportsbooks have been offering parlay cards for years, which Nevada regulations say can include not only the outcomes of multiple games but also “a series of three or more contingencies incident to particular games, matches of similar sports events.”
DRAFTKINGS CEO HOISTED ON HIS OWN PETARD
The opinion includes a quote from DraftKings CEO Jason Robins taken from a discussion on Reddit, in which Robins describes the concept behind his company being “almost identical to a casino.” Robins is also quoted referring to DFS stakes as “wagers” and “bets” and player activity as “betting.”
The ‘alt text’ identifying a graphic that appears on multiple DraftKings web pages includes multiple phrases which all include the word “betting.” The opinion says this indicates that while DraftKings’ representatives “publicly state that they do not believe daily fantasy sports involve ‘wagers’ or ‘bets,’ they do use the terms ‘betting’ and ‘wagering’ when they are not dealing with law enforcement agencies.”
The opinion also notes the fact that DraftKings has applied for and received gambling licenses in the UK. The licenses cover “pool betting” and “gambling software,” phrases that the opinion points out are noticeably absent from DraftKings’ press release. The opinion concludes that DraftKings “recognizes the appearance of inconsistency between its position that it should be unregulated in the United States and its decision to submit to gaming regulation in the United Kingdom.”
This may be reading too much into it, but one can’t help but notice that DraftKings’ name appears 17 times in the opinion, while FanDuel’s name doesn’t appear at all. Has FanDuel really been that much better at minding its P’s & Q’s or is there something about DraftKings’ handling of the data leak scandal – which has ranged from dismissive all the way to defensive – that just rubs the right people the wrong way?
WAR OF WORDS CONTINUES
Both DraftKings and FanDuel announced their withdrawal from the Nevada market following Nevada’s C&D letter. FanDuel said it was “terribly disappointed” that Nevada had decided that “only incumbent Nevada casinos may offer fantasy sports.” Clearly not having got the memo regarding the skill argument, FanDuel said Nevada’s decision “stymies innovation and ignores the fact that fantasy sports is a skill-based entertainment product loved and played by millions of fans.”
DraftKings’ statement said it understood that “the gaming industry is important to Nevada and, for that reason, they are taking this exclusionary approach against the increasingly popular fantasy sports industry.” DraftKings said it “strongly” disagreed with Nevada’s position and said it would “work diligently to ensure Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy.”
For the record, the word ‘betting’ does not appear in either statement.
