Fantasy sports are illegal gambling in Tennessee: attorney general

(Reuters) - Fantasy sports contests constitute illegal gambling under Tennessee law, the state attorney general said this week in an opinion about a multibillion-dollar online industry that has been challenged legally in several states.

Nick "1ucror" Dunham speaks in front of a spreadsheet at the DFS Players Conference about "The Process of a Top Cash Game Player" in daily fantasy sports betting in New York November 13, 2015. REUTERS/Lucas Jackson

Fantasy sports, which have been popular for decades, allow participants to create fictional teams of athletes from national sports leagues. The better a chosen athlete performs in real life, the better the player’s fantasy team does.

The opinion from the office of Tennessee Attorney General Herbert Slatery III follows increased scrutiny of fantasy sports from state regulators over the past year, with attorney generals in New York, Illinois and Nevada challenging their legality.

Officials in particular have turned their attention to online daily fantasy sports competitions which allow players to draft teams for games lasting just one evening or a weekend, in a turbo-charged version of the original season-long contests.

Slatery’s office, in a three page opinion, challenged the legality of fantasy contests that give players the chance to win a share of a cash prize, which their entry fees help fund.

“A person who knowingly engages in ‘gambling’ commits a punishable offense,” Slatery’s office said in the opinion released on Tuesday.

“Absent legislation specifically exempting fantasy sports contests from the definition of ‘gambling,’ these contests constitute illegal gambling under Tennessee law,” it said.

Top daily fantasy sports companies FanDuel and DraftKings last month agreed to halt their business in New York, betting on a legislative path to make the games legal after a months-long fight.

DraftKings said in a statement it was having “an active dialogue with elected officials” in Tennessee to advance legislation to govern the company’s “skill-based contests”.

“We call on all of our fans and Tennessee supporters to let their voices be heard in the coming days to show support for this legislation and protect their right to play the games they love,” the company statement said.

Tennessee law broadly defines gambling as risking anything of value for a profit whose return is contingent on chance, subject to a few exceptions, the Tennessee attorney general opinion said.

Gambling does not include a lawful business transaction, annual events benefiting nonprofit organizations and a state lottery, according to the opinion.

Craig Fitzhugh, a Democratic state representative in Tennessee, requested the opinion.

Reporting by Suzannah Gonzales and Alex Dobuzinskis, editing by G Crosse