Casinos and Gaming

Illinois: Daily fantasy sports is illegal gambling

Illinois AG: Fantasy Sports is illegal gambling

The Illinois attorney general on Wednesday deemed daily fantasy sports to be illegal gambling under state law in another blow to embattled companies DraftKings and FanDuel.

In an opinion delivered to state representatives, Attorney General Lisa Madigan said she felt short-term, paid contests offered by the companies should be considered gambling. Her office now expects DraftKings and FanDuel to change their terms of use and make Illinois residents ineligible to compete until lawmakers pass new legislation.

The designation marks another hit to the fast-growing companies, which are embroiled in a legal battle to continue operating in New York. DraftKings and FanDuel can currently operate in New York while they appeal an injunction barring them from operating there.

The companies — which expect to see billions of dollars in contest entry fees this year — operate under a federal legal carve out. But they have faced increased scrutiny at the state level in recent months amid an advertising barrage and concerns about employee access to confidential information.

Daily fantasy companies have argued that the games take skill and deserve distinction from poker or traditional sports gambling. But New York Attorney General Eric Schneiderman and others have contended that they constitute gambling.

"Chicago may be the best sports town in the country. It's a city -- and Illinois is a state --that plays fantasy sports like almost no other. "The League" is even set in Illinois. So why the Attorney General would tell her 13.5 million constituents they can't play fantasy sports anymore as they know it -- and make no mistake, her opinion bans all forms of fantasy sports played for money -- is beyond us," a FanDuel spokesperson said.

"Hopefully the legislature will give back to the people of Illinois the games they love. A sports town like Chicago and a sports loving state like Illinois deserves nothing less."

In a statement, DraftKings counsel David Boies said the company disagreed with the Illinois opinion and "the reasoning behind it." DraftKings plans to ask a court whether it can operate in Illinois.

"We believe daily fantasy sports, which Illinois residents have been playing for years, are lawful under state law. We also believe, as the attorney general has said, that this is a policy question for state legislators to address," he said.

In the contests, users pick lineups of real athletes and can win money based on their performance in games. Schneiderman and others have argued that players lack control over the real-world outcomes.

Disclosure: Comcast and NBC Sports are investors in FanDuel.