GAMBLINGCOMPLIANCE: DFS Companies Pull Out Of Idaho, Alabama

DraftKings and FanDuel have quit providing paid daily fantasy sports (DFS) contests in Idaho, making it the second state in less than a week in which the companies have agreed to pull out and refund player deposits.

The agreement with DraftKings and FanDuel was reached after three months of negotiations, Idaho Attorney General Lawrence Wasden said Monday.

On Friday, both companies pulled out of Alabama following a similar agreement.

“The concern I have is that paid daily sports offerings provided by these companies constitute gambling under Idaho law,” Wasden said in a statement.

“I have a duty to enforce and uphold that law. I commend the companies for negotiating in good faith and agreeing not to make these contests available in Idaho.”

Under the terms of the agreement, as of May 1 the companies will not allow any consumers in Idaho to participate in any of their paid online fantasy football, baseball, basketball and other sports contests.

Both FanDuel and DraftKings have agreed to process requests by their Idaho customers to withdraw their account balances in a timely manner. The companies will monitor Idaho players based on geoblocking technology or through IP addresses.

Wasden began a review of the companies and their websites in January amid concerns regarding the legality of the daily fantasy sports contests offered by those companies.

The Idaho Constitution prohibits gambling except for the state lottery, pari-mutual wagering, bingo and raffle games.

“Idaho defines gambling, in part, as risking money or other thing(s) of value for gain that is contingent in whole or part upon chance or the outcome of an event, including a sporting event,” Wasden said.

Wasden said he was concerned that DFS offerings require participants to risk money for a cash prize contingent upon individual athletes’ collective performance in various sporting events.

“As I see it, this falls within Idaho’s definition of gambling,” Wasden said.

However, Wasden did say Monday the sites could offer “free” DFS leagues or other contests that offer prizes to players in Idaho.

Idaho and Alabama became the 10th an 11th states in which the attorney general considered DFS to be a form of gambling and illegal.

On its website, the lobbying group Fantasy Sports For All urged Idaho residents to email their standard note to state lawmakers asking them to keep “fantasy sports accessible for Idaho residents.”

“You should decide if you play fantasy sports, not lawmakers,” the group said.

In an email to its Idaho users, FanDuel said it had “always operated within the law in Idaho, however, as we continue to evaluate the legal framework, we have decided to suspend our paid operations in the state.”

“We are continually working to clarify the law and look forward to working with legislators to enact consumer protections so that we can bring our paid contests back to Idaho sports fans once again. As has always been the case, users in Idaho can withdraw their funds at any time,” FanDuel said.

Attorneys general in several states, including Texas, Hawaii and Mississippi, have formally opined that DFS is illegal under state law, according to U.S. Daily Fantasy Sports Tracker, GamblingCompliance’s legislative monitoring service.

One of those opinions from the Tennessee attorney general was overruled last week after Governor Bill Haslam signed a bill legalizing and regulating DFS. The state joined Indiana and Virginia in regulating DFS, but Tennessee is the first state to impose a direct tax on contests adjusted revenues.

Wasden also said the Idaho Legislature could act to legalize and regulate DFS, or the contests could resume “if a court with authority and jurisdiction in Idaho rules in favor of any form of such contests.”

The agreement is not “an admission of liability or evidence of wrongdoing by the companies,” the attorney general said.

The two-page release made no specific references to other DFS companies.

There is a similar story in Alabama, where both FanDuel and DraftKings are complying with a cease and desist letters issued by the state attorney general last month.

In a statement emailed to GamblingCompliance, a FanDuel spokeswoman says the company believes it had always operated within the law in Alabama.

“And while we strongly disagree with the attorney general’s opinion, we respect him and the office and have decided to suspend paid contests in the state. It’s an unfortunate development for legions of fantasy sports fan, but the state legislature can conclusively resolve this issue and bring fantasy play back to Alabama,” she said.

DraftKings also issued a statement announcing its decision to leave Alabama.

“While we disagree with the Attorney General’s conclusions and know that DFS players join in our disappointment that we are ceasing operations in Alabama, we look forward to continued and constructive engagement with state legislators,” the company said.

Neither FanDuel or DraftKings stated how many customers would be affected by their decision to pull out of Idaho or Alabama.

On April 5, Alabama Attorney General Luther Strange announced the cease and desist letters after reviewing the state’s gambling statutes and determined that “paid daily fantasy sports contests constitute illegal gambling.”

A pair of identical bills was filed in the Alabama House and Senate in early February to create a regulatory framework for DFS operators under Strange’s office.

Both House Bill 56 and Senate Bill 114 must pass both chambers before the legislature is scheduled to adjourn on May 16.

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