Illinois Attorney General has Banned DraftKings and FanDuel

The Illinois Attorney General, Lisa Madigan, has placed a ban on the two Daily Fantasy Sports operators, DraftKings and FanDuel, stating that they violated state laws. This was announced after New York's Attorney General, Eric Schneiderman, had stated that the operators were illegal gambling operators.

In response to a letter of inquiry from state representatives Elgie Simms and Scott Drury, Ms. Madigan explained that she believed both operators, FanDuel and DraftKings—and presumably other DFS operators—were operating illegal gambling under the state's criminal code.

Ms. Madigan cited the Illinois Criminal Code 28-1(a)(12), saying that a company or person violates the law when they knowingly establish, maintain, or operate an internet site that allows a person to play a game of skill or chance for money or any other thing of value.

Ms. Madigan did say that Illinois law allowed certain exceptions to this law, and that DraftKings and FanDuel have asserted that they were included under a section which specifically states the code offers an exemption to offers of cash prizes to actual contestants in any bona fide contest of skill, speed, strength, or endurance. In the letter, Ms. Madigan explained that she didn't agree that the DFS players were the actual contestants, and that only the athletes themselves could gain that distinction.

The letter has come at a time when Illinois state legislation is looking to regulate DFS and apply stricter rules for players.

It must be noted that the letter doesn't directly direct the DFS operators to cease their operations; it is just a reply to two state representatives who asked the AG's opinion on the legality of these sites. This means the sites are not technically required to shut down until they are ordered to, and that has not happened yet.

DraftKings' counsel has responded with a statement saying that they disagree with the AG's decision, and that they look forward to working with the state regarding the passing of new legislation regulating DFS. Counsel continued that they did not understand the reasoning behind this, and that they believe Daily Fantasy Sports have been played by residents of Illinois lawfully under state law for years, and that this is a policy question for the state legislators to address.

David Boies, counsel for DraftKings and Chairman of Boies, Schiller & Flexner LLP, said that they look forward to working with the lawmakers; they would like to see thoughtful, common-sense legislation that will protect consumers' rights to compete while adopting appropriate consumer protections.

The company will seek judicial resolution of their rights to offer Daily Fantasy Sports contests to residents of Illinois.