By Brandon Moseley
Alabama Political Reporter
On Tuesday, April 6, Alabama Attorney General Luther Strange (R) ordered FanDuel and DraftKings to close down their business in the state of Alabama by the end of the month. After reviewing recent case law and Alabama’s gambling statute, Strange determined that the business model of the popular fantasy sports contests for money were violations of Alabama’s strict anti-gambling language in the 1901 Alabama Constitution.
State Representative Allen Farley (R-McCalla) praised Strange’s ruling. Rep. Farley wrote in a statement, “During a recent discussion of an Internet Gambling Bill on the House Floor I was forced to stand quietly in the background as other members of the Alabama House were given opportunities to voice their concerns, and the concerns of their constituents. I appreciate Attorney General Luther Strange for stepping up and taking control before the Alabama Legislature could crack open a door that would have allowed professional gambling organizations a direct path to our young people in the name of “Fantasy Sports.” Job Well Done Mr. A.G.!!!”
Alabama Citizens Action Program (ALCAP) Executive Director Joe Godfrey said, “ALCAP applauds Alabama Attorney General, Luther Strange, for enforcing the gambling laws of our state by banning Daily Fantasy Sports Internet gambling.”
The two companies understood that their activities were illegal under most readings of Alabama law. That is why they spent a large amount of money this session lobbying the legislature to pass legislation which would have legalized their activities.
HB56 was sponsored by State Representative Connie C. Rowe (R-Jasper). A similar bill, SB 114 was sponsored in the Senate by Senator Paul Sanford (R-Huntsville).
Actually betting on football, basketball, baseball, hockey and other team sports is illegal outside of the state of Nevada. Many people do form fantasy leagues where they manage pretend sports teams. The leagues award fantasy points based on professional athletes’ statistics for the season or even just for the week. The winner of the fantasy league takes home winnings. This activity which grew from clubs was corporatized. The two largest firms being Fan Duel and Draft Kings. $millions of dollars are now in play each weekend and these activities are largely unregulated.
HB56 or SB114, if passed by the legislature, would change that. Any firm wishing to operate a fantasy business would have to get a license and pay $25,000 to the state for the first year of operation and pay seven percent of their profits. Firms operating without a license would be subject to additional fines and penalties.
Godfrey opposed the legislation, “This is gambling, “We should not legalize it when other states are banning this.” “Representatives of the two biggest fantasy sports companies, Fanduel and DraftKings, are pulling legislators’ “strings” and getting commitments from House Members and Senators to support their attempts to legalize this internet gambling scheme. People need to contact their legislators and ask them to oppose the fantasy sports legalization bills, SB114 and HB56!”
Legislators have told the Alabama Political Reporter that they fear that the legislation which would legalize “games of skill” versus “games of chance” would by used by gamblers to open up the state to many other forms of gambling in the courts. Others question if a simple statute really would have been constitutional anyway, given that gambling in Alabama is constitutionally forbidden and even the Attorney General believes that fantasy sports contests are games of change and not games of skill (and thus illegal). The matter likely would have gone to the courts, where gambling interests have a long track record of losing.
It is not known at this time how much money taxing fantasy sports would generate for the State of Alabama.
Strange said, “As Attorney General, it is my duty to uphold Alabama law, including the laws against illegal gambling. 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.”
Eleven states have now banned fantasy sports.
