Daily Fantasy Sports (DFS) websites DraftKings and FanDuel have reached an agreement with Alabama Attorney General Luther Strange to cease operations in the state after the AG’s office declared the relatively new practice to constitute illegal gambling last month.
In DFS, participants pay to create a roster of players, then pit their roster against those of other participants. Whomever’s roster performs the best that day within a particular pool wins prize money through the site.
“I am pleased to report that fantasy sports operators DraftKings and FanDuel have complied with my order that they halt paid contests within the State of Alabama,” said Strange.
“As Attorney General, it is my duty to uphold Alabama law, including the laws against illegal gambling. The daily fantasy sports operations violate state law because a player stakes something of value on a contest of chance in order to win a prize. While there is a measure of skill involved in creating a fantasy sports roster, in the end, contestants have no control over the performance of the players on their rosters. This activity is illegal under Alabama law.”
In addition to ceasing operations in the state, DraftKings and FanDuel must process user requests from Alabama-based IP addresses to withdraw their account balances within seven business days of receiving such requests, according to the AG’s office.
According to Alabama Code Section 13A-20-12, a person participates in gambling if he or she “stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome.”
Gambling in Alabama is illegal, with a few exceptions including buying securities and commodities, insurance, and some grandfathered activities.
DFS sites often contend they are games of skill, not of chance, and thus aren’t covered under most states’ gambling laws, but Strange argues this is not sufficient to keep them legal in Alabama.
Two bills which would have undone the AG’s actions are stalled indefinitely in their houses of origin in the Alabama Legislature. With only two days left in the 2016 Regular Session, it is now virtually impossible for either of them to be considered during this session.