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No more pay to play for Delaware fantasy sports fans

Cape Gazette of Lewes, Delaware

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Delaware players looking for a fantasy sports payout can no longer do so legally. A July 7 Department of Justice decision has barred DraftKings, FanDuel and Yahoo from paying winners in Delaware.

Officials notified the online fantasy sports companies to include Delaware among states that do not permit monetary payouts.

In March, officials initially told state regulators that online fantasy sports games played for money were not permitted under Delaware law, said Carl Kanefsky spokesman for the Department of Justice. The fantasy sports companies were also informed at this time, he said.

The department initially refrained from taking formal action because there was talk of legislation regarding online fantasy sports games. When no legislator put forth legislation, Kanefsky said, officials formally notified the gambling companies.

Kanefsky said Delaware's Constitution clearly articulates the general prohibition of gambling. Article II, section 17 prohibits "[a]ll forms of gambling" except "(a) Lotteries under state control for the purpose of raising funds."

Online fantasy sports games that are offered in Delaware are not presently "under state control." Relying on the Delaware Constitution, as well as state and federal case law, state attorneys determined that online fantasy contests that involve payment for playing and monetary rewards constitute gambling because chance, as opposed to skill, is the dominant factor in the outcome of these contests.

An online fantasy sports contestant selects fantasy players and teams, but has no role in how these players actually perform once the real-life games or events occur. Real-life players perform better on some days than on others. The weather can affect how a real-life player performs.

A manager or coach can decide not to use certain real-life players, who may be injured during a game or, in the football context, may not run the ball as often or catch as many passes as a skilled participant might expect. As a result, the most skilled participants might lose and less skilled participants might win because of what actually happens during the real-life game.

In other words, real-life players are human and human behavior is unpredictable. This is why chance - and not skill - is the dominant factor in online fantasy sports contests and why these contests are illegal in Delaware, Kanefsky said.

As games of chance, Kanefsky said, these contests are lotteries that must be operated under the control of state officials or permitted through specific legislation. Delaware law does not permit online fantasy sports contests where participants have to pay to play and have a possibility of winning money, like those offered by DraftKings Inc., FanDuel Inc., and Yahoo! Inc.

To the extent these companies are willing to offer contests without the possibility of winning money or should Delaware law change in the manner proposed in House Bill 444, such games might be offered legally.

For online fantasy sports contests that do not require payment for participation and have no possibility of a monetary reward, justice officials have not demanded they cease and desist operation. Kanefsky said unless such contests can be offered legally, justice officials must enforce the law.

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Original Publication Date: July 12, 2016

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