Illinois has added its name to the list of US states that believe daily fantasy sports is gambling and thus illegal under state law.
Madigan notes that Illinois’ Criminal Code prohibits playing “games of chance or skill for money” and bars anyone from operating an internet site that facilitates such activity. There are certain exemptions from this prohibition, but Madigan believes the exemption cited by the DFS operators “does not apply.”
Illinois gambling law exempts contests in which “the actual contestants” compete for some prize, award or compensation, but Madigan says DFS players win or lose based on the performance of the actual athletes playing a sport, which she says is no different from traditional sports wagering.
Madigan’s opinion cites a 1994 opinion by her then counterpart in Texas, who found that a similar exemption in Texas law “does not embrace those who pay entry fees for a chance to win a prize from forecasting the outcome” of sporting events.
Madigan says the DFS operators like to claim that their contests are games of skill, not chance, but Illinois law “expressly encompasses both.” Add to that the fact that DFS contestants pay an entry fee in the hopes of winning a prize, and what you’ve got yourself there is some illegal gambling.
Madigan notes that Illinois legislators have proposed legislation that would create ‘consumer safeguards’ to govern DFS activity and that these bills have attracted sponsors in both of the state’s legislative chambers. However, until those measures are approved, Madigan says DraftKings and FanDuel need to GTFO of her state or face the consequences.
Madigan’s opinion puts Illinois’ name alongside Arizona, Iowa, Louisiana, Montana, Washington, Nevada and New York on the list of states where DFS isn’t welcome and other states – most notably, Texas – are believed to be planning on adding their names to that list in short order.
In response to Madigan’s opinion, FanDuel issued a statement urging legislators to “give back to the people of Illinois the games they love.” Illinois is believed to account for around 5% of total DFS activity, making the necessity of exiting the market particularly painful for operators already facing sharply declining activity levels over the past nine weeks.