Tennessee has become the second state in USA to classify daily fantasy sports as an unlawful activity, this week; their decision came just one day after their counterpart, on the other side of the border, Alabama, decided that fantasy sports should be classified illegal in their state too and banned all operations.
The Attorney General of Tennessee, Herbert Slatery, issued an opinion on Wednesday stating that DFS was illegal gambling under Tennessee state law. He mentioned that “broadly defined under Tennessee law, any activity, in which a player has to risk “anything of value for a profit whose return is to any degree contingent on chance” is considered gambling.
The DFS Thing
Daily Fantasy Sports Companies, such as FanDuel and DraftKings, work by allowing players to build virtual teams with athletes based on real life sportsmen. These teams can then be entered into a variety of contests by paying an entry fee. The outcome of the virtual tournaments is dependent on the performance of the real life athletes; winners of these contests gain to win large cash prizes and other rewards.
Not enough skill?
Much like his counterpart, the Attorney General of Alabama, Luther Strange, Slatery noted that while DFS participants do in fact apply a certain level of skill when it comes to selecting members for their virtual team, the actual performance of each athlete at each game is still unpredictable. Winning a fantasy contest requires strong performances on the part of the selected athletes and as this cannot be controlled by any skilful means; the contests are always “contingent to some degree of chance”.
Slatery said that this definition is “straightforward and unequivocal;” the only exceptions that can be made from the rules are reserved for organisations carrying out a “lawful business transaction,” for example, a state lottery and annual charity events run by non-profit organisations that have acquired required permits or have been given approval by the state law.
White Slatery’s decision seems to mimic that of Strange’s quite closely, unlike Alabama, the opinion issued by Tennessee seems to extend beyond just daily fantasy sports; they include any and all fantasy sports contests that require players to deposit an entry fee. The Attorney General’s office in Tennessee is also yet to issue cease and desist orders to DFS operators; what action is to be taken toward these companies is still very much dependent on the outcome of the General Assembly, who seem to be in favour of adding fantasy contests to the list of gambling exceptions for the state.