Prosecutor Issues Cease-and-Desist Letters to DraftKings, FanDuel

News Release from Honolulu Prosecutor’s Office, February 2, 2016

Prosecuting Attorney Keith M. Kaneshiro yesterday sent letters to the chief executive officers of FanDuel and DraftKings demanding that the companies cease daily fantasy sports contests on Oahu.

The letters read:

“This letter constitutes a demand that DraftKings and FanDuel immediately cease and desist from accepting wagers from residents of the City and County of Honolulu in connection with daily sports fantasy contests.

“Gambling is illegal in Hawaii, and on January 27, 2016, the state Attorney General issued a formal advisory opinion confirming what I have long believed: That daily fantasy sports contests are a form of gambling and violate Hawaii statutes.

“While DraftKings and FanDuel represent that their contests are games of skill because players select their lineups, Hawaii law specifically states that ‘a contest of chance means any contest, game, gaming scheme, or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.’

“The law goes on to say that ‘a person engages in gambling if he states or risks something of value upon the outcome of a game of chance …. ’

“Further, by advancing a contest of chance, accepting wagers from Oahu residents and profiting from those payments, DraftKings and FanDuel are promoting gambling under Hawaii laws.

“Like lawmakers and law enforcement in close to a dozen states, I reject the notion that the 2006 Unlawful Internet Gambling Enforcement Act exempts fantasy sports contests from state laws as it does not define what constitutes gambling. Hawaii’s gambling laws are clear and DraftKings and FanDuel are violating those laws.

“Therefore, as Prosecuting Attorney for the City and County of Honolulu, I must demand that DraftKings and FanDuel immediately halt accepting wagers from Oahu residents and refrain from doing further business on Oahu.”

PDF: Prosecutor issues cease-and-desist letter to DrafKings, FanDuel 

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DraftKings says it will withdraw from Hawaii

Boston Globe Feb 3, 2016: “While we disagree with the Attorney General’s opinion because daily fantasy sports are games of skill permitted under Hawaii law, we are hopeful our constructive engagement with Hawaii legislators will promptly address the issue so that our loyal fans can continue to enjoy the games they love without anyone questioning the legality of their conduct,” DraftKings said in a statement. “In the meantime, we will voluntarily pause operations in the state but hope to resume soon.”

A person familiar with DraftKings’ thinking said the company decided to withdraw from the state in part because Hawaii is a small market, but also because Chin’s ruling insinuated that daily fantasy players, not just operators, could be held liable for breaking state law. The person also said the company was hopeful about the prospects of a bill in the Hawaii legislature that would explicitly legalize fantasy contests, allowing it to resume operations there.

FanDuel declined to comment. Both companies voluntarily withdrew from Nevada last year, after regulators ruled that fantasy sports operators needed to secure gambling licenses.

read … The Boston Globe

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HB1838: Fantasy Gambling Bill

SA Feb 3, 2016: …House Bill 1838 and Senate Bill 2722 would authorize and regulate so-called “fantasy contests,” and specifically exempt them from the gambling statute. They would be placed outside the legal definition of a “contest of chance” or “gambling.”

These bills are industry proposals, introduced at the request of DraftKings and FanDuel….

read … Treat ‘fantasy’ games as gambling 

Reality: Gambling on a Hawaiian Tribe

Background: Complete List of 2016 Gambling Bills