DOVER — The Delaware Department of Justice notified DraftKings Inc., FanDuel Inc. and Yahoo! Inc. that their respective online fantasy sports activities are not permitted under Delaware law.
The companies also have been asked to add Delaware to their respective online lists of states in which players are not legally permitted to win monetary prizes, the department said Friday.
It had initially notified state regulators in March that these types of games were not permitted under Delaware law.
Justice initially refrained from taking formal action, spokesman Carl Kanefsky said in a statement issued Friday, because certain online fantasy sports companies indicated that a change in Delaware law would be proposed in the state legislature.
However, with the General Assembly’s session ending June 30 without a law being passed, the Justice Department sent formal notices to the companies Thursday.
The Delaware Constitution clearly articulates the general prohibition of gambling in the state, according to the Justice Department.
It cite Article II, section 17, as prohibiting “[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, Justice attorneys determined 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 are human and human behavior is unpredictable, meaning chance — and not skill — is the dominant factor in online fantasy sports contests, the Department of Justice said in the statement. That makes the contests illegal in Delaware.
The Justice Department said it would not shut down online fantasy sports contests that do not include a requirement of payment for participation and the possibility of a monetary reward.