MONTGOMERY, Ala. — After extended silence, Alabama Attorney General has declared that online fantasy sports betting sites are illegal according to state law.
Popular sites DraftKings and FanDuel have been issued cease and desist letters by Strange and have until May 1st to end all paid contests in the state of Alabama.
“As Attorney General, it is my duty to uphold Alabama law, including the laws against illegal gambling,” Attorney General Strange said in a statement. “Daily fantasy sports operators claim that they operate legally under Alabama law. However, paid daily fantasy sports contests are in fact illegal gambling under Alabama law.”
Strange says that in Alabama, an activity constitutes illegal gambling if a person stakes something of value on a contest of chance, even when skill is involved, in order to win a prize.
Over 700,000 Alabamians — roughly 20% of the state’s population over the age of 18 — played fantasy sports last year, with the vast majority participating in various NFL and NASCAR fantasy leagues.
Here’s how it works:
Season-long fantasy leagues often consist of groups of friends who play for free on websites like ESPN and Yahoo. Daily and weekly fantasy games, however, begin by team managers paying an entry fee — ranging from as little as 25 cents up to $1,000 — to compete against opponents — ranging from dozens of them, to hundreds — for a prize pool that can sometimes be as large as $2 million. Team managers bid on real-life players to assemble a roster, then win or lose based on how their fantasy players perform in real games.
The debate over fantasy sports regulation comes down to whether or not they are considered games of chance or skill. Strange contends that they are clearly contests of chance, but online fantasy sports advocates say that there is far more to it than just that.
Thousands of experts compile and analyze the data and fantasy team managers consume as much data as possible in hopes of getting a leg up on the competition. It is for this reason that the top level fantasy leagues see their most skilled players win on a regular basis.
Many fantasy football team managers, for instance, not only take into account surface-level statistics like receiving, passing and rushing yardage, but much more nuanced considerations. These may include how each player has historically performed against the team he is facing; how the weather may impact each player’s output; whether a player may be extra motivated against a rival; and even what time of day the game is taking place. In paid games, these deeper considerations could also include which players are relatively under-or-overvalued, based on what other players are bidding to have them on their team.
Fantasy sports advocates point to the similarities between their contests and fishing or golf tournaments. Players pay an entry fee prior to playing. There are certain elements of chance involved. For instance, the weather could impact your round of golf differently from an opponent with a different tee time, and sometimes the fish in certain areas of a lake just happen to be biting more than in others. And yet golfers like Jordan Spieth and anglers like Aaron Martens win tournament after tournament. The same can be said of the top fantasy football leagues. The best players statistically win more often than their competition.
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Senate Bill 114 — and a companion bill in the House (HB56) — would clarify that fantasy sports are legal in Alabama and “establish the Fantasy Contests Act to regulate the operation of fantasy or simulated contests in the state.”
The fantasy sports companies are in favor of the regulation, which clarifies their legitimacy in the state and creates a transparent system of accountability.
But some interest groups in Montgomery are pushing for more onerous regulations that would make it difficult for the fantasy sports industry — which generated a jaw-dropping $4.6 billion in revenue in 2015 — to operate in Alabama.
The action in legislature, if passed, would counteract the actions of A.G. Strange and protect the legal operation of online fantasy sports companies in the state.
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