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Daily Fantasy Update: Idaho Says No, Tennessee Says Yes (Sort Of)

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By Christopher Coble, Esq. on May 16, 2016 2:15 PM

At this point, it can be hard to keep track of which states allow daily fantasy sites like DraftKings and FanDuel, which states have declared it illegal gambling and banned it, and which states have some new regulatory law in place. (Lucky for you, an upstart, independent sports media entity with no vested interest in the success of one of those sites has a handy guide to help.)

The latest developments are coming from the Gem State and Volunteer State, where one state booted DraftKings and FanDuel, while the other declared fantasy sports "illegal gambling" weeks before passing sweeping legislation regulating and taxing daily fantasy sites.

State of the Game

Idaho became the 16th state to declare daily fantasy sites as illegal gambling under state law, and DraftKings and FanDuel agreed to prohibit Idaho residents from participating in any daily paid online fantasy contests. (Idahoans can withdraw and keep any winnings, however.)

"Idaho defines gambling, in part, as risking money or other thing of value for gain that is contingent in whole or part upon chance or the outcome of an event, including a sporting event," said Idaho Attorney General Lawrence Wasden via press release. "My concern is that the daily fantasy sports offerings my office reviewed require participants to risk money for a cash prize contingent upon individual athletes' collective performances in various future sporting events. As I see it, this falls within Idaho's definition of gambling."

Tennessee's attorney general had a similar view. Herbert Slatery released an opinion on April 6th saying, "absent legislation specifically exempting fantasy sports contests from the definition of 'gambling,' these contests constitute illegal gambling under Tennessee law."

That legislation appears to have already been afoot -- exactly three weeks later, Tennessee Governor Bill Haslam signed the Fantasy Sports Act (FSA) requiring fantasy sports operators to be licensed with the state and imposing a 6 percent privilege tax on all adjusted revenues.

A Nation Divided

The current tally, according to ESPN: 7 states have either explicitly or implicitly sanction daily fantasy sites; 16 have banned it or declared it illegal under state gambling laws; and 15 states have legislation regulating daily fantasy in the works. The other 12 seem to be waiting on the sidelines until the whole mess is sorted.

As we've pointed out before, there is a federal vacuum when it comes to daily fantasy regulation. The Unlawful Internet Gambling Enforcement Act (UIGEA) currently includes an exception for "fantasy or simulation sports game[s]", but that law had you and your buddies' 8-team fantasy football league in mind and Congress has begun to wonder if it needs to step into the more complicated realm of daily fantasy betting.

Until that day, expect a patchwork of fantasy legislation covering some very real gambling.

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