Attorney General Maura Healey is reviewing the legality of DraftKings, and you better believe every heavyweight in the world of daily fantasy sports is watching.
With one move, she could prevent Bay Staters from participating in the massively popular contests that have already generated millions of dollars.
“She could issue an advisory opinion, and while courts aren’t obliged to give it binding effect, an AG’s opinion in a state like Massachusetts would be the sole legal authority,” said Daniel Wallach, a sports law attorney. “If she takes the view that it’s not legal, you’re going to see major repercussions.”
DraftKings and other similar sites allow users to assemble teams of hand-picked, real-life players. The team manager then pays to enter a contest, and if his team wins, he takes home more money than he put in.
It sounds a lot like gambling, and that’s what has some concerned.
Online sports wagering and online gambling were outlawed by the Professional and Amateur Sports Protection Act more than 20 years ago. However, the Unlawful Internet Gambling Enforcement Act, which passed in 2006, carved out an exemption for fantasy games.
Whether or not it gives a loophole to gamble on daily fantasy sports is a murky area of law, but some states have taken it upon themselves to either regulate or outlaw the games. Since Massachusetts has no laws directly governing daily fantasy sports, Healey’s decision could cause entities such as DraftKings to play it safe and not allow Massachusetts residents to play.
This has already happened in other states. In Kansas and Michigan, gaming authorities raised questions about the legality of the games, and Star Fantasy League — one of the top 10 largest daily fantasy sports companies — backed out of the markets. Kansas legalized the games, but Michigan is still up in the air.
Seth Young, COO of Star Fantasy League, said he isn’t worried about Massachusetts yet.
“If it’s just them reviewing this, we feel we’re on solid legal ground,” Young said. “But, if there is a big red flag thrown up and they say they think it’s illegal, we’ll probably do our own risk assessment.”
All told, 45 states allow “skill-based gaming.” That’s the big distinction: Games of skill are theoretically legal, while games of chance are not.
We’re not sure if Healey will issue an opinion on daily fantasy sports or not. Her office wouldn’t tell me what “reviewing” means. In fact, a spokeswoman told me: “Reviewing means reviewing.”
But really, it could mean a lot more than that.