Alabama AG orders DraftKings and FanDuel to stop operations

The state’s gambling statutes deem pay-for-prize daily fantasy illegal gambling.

Alabama Attorney General, Luther Strange, sent a cease and desist letter to FanDuel and DraftKings urging them to stop their operations in the Southern state.

US.- Yesterday (Tuesday,) Alabama Attorney General Luther Strange sent a letter ordering Daily Fantasy Sports (DFS) operators DraftKings and FanDuel to cease and desist their operations in the state.

The letter says that Strange examined Alabama’s gambling statutes and determined that pay-for-prize daily fantasy sports operations constitute illegal gambling in the state. “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,” said Strange also noting that the inclusion of skill as an element to the outcome of the game is not a determining factor as to its legality. When chance is involved, it may constitute illegal gambling according to Alabama law.

Section 13A-12-20 of the Code of Alabama explains what constitutes gambling in the state: “A person engages in gambling if he 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 does not include bona fide business transactions valid under the law of contracts, including but not limited to contracts for the purchase or sale at a future date of securities or commodities, and agreements to compensate for loss caused by the happening of chance, including but not limited to contracts of indemnity or guaranty and life, health or accident insurance.”

Strange has given DraftKings and FanDuel until May 1, 2016 to cease operations in Alabama. Furthermore, under Section 13A-12-30, the money involved in the gambling activity may be forfeited to the state. It is likely that Strange will threaten legal action against FanDuel and DraftKings if they don’t comply with the demand letter to cease and desist by May 1. Failure to comply could result in the forfeiture of revenues received from their pay-for-prize offerings.