On Friday, the Delaware Department of Justice announced that it had sent letters to DraftKings, FanDuel and Yahoo informing them that their real-money DFS contests “are not permitted under Delaware law” and asking the operators to add Delaware to their list of no-go states.
The DOJ says it notified state regulators in March that DFS was illegal gambling because “chance, as opposed to skill, is the dominant factor in the outcome of these contests.” Delaware law prohibits all gambling except “lotteries under State control,” and the DOJ says the state has no control over DFS activity.
The DOJ believes chance is the dominant factor in DFS contests because while a contestant may select individual athletes, he or she “has no role in how these players actually perform.” The DOJ claims that “the most skilled participants might lose and less skilled participants might win” because “real-life players are human and human behavior is unpredictable.”
The DOJ said regulators had relayed the DOJ’s legal position to operators but the DOJ refrained from taking further action because “certain online fantasy sports companies” claimed that Delaware was on the cusp of amending its laws to permit DFS. However, the DOJ noted that the Delaware General Assembly’s latest session expired on June 30 with no action taken on DFS, and here we are.
The DOJ acknowledged that legions of Delaware residents enjoy DFS and it has no plans to block contests that don’t require an entry fee. But until the state legislature okays real-money play, “the Department of Justice must enforce the law.”
None of the named DFS operators have so far seen fit to comment publicly on the DOJ’s letter. The operators have historically honored such requests in states with small populations, while ignoring similar appeals from larger states that would have a more significant impact on the bottom line.