DraftKings, FanDuel files lawsuit against Illinois attorney general

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Friday, December 25, 2015

Daily fantasy sports powerhouse operators DraftKings and FanDuel filed separate lawsuits against Illinois Attorney General Lisa Madigan on Thursday, a day after she declared daily fantasy sports violates state gambling laws.

The companies argue that their contests are games of skill allowed by state law. They're seeking to stop Madigan from enforcing her interpretation of the law and putting them out of business in Illinois.

DraftKings attorney Randy Mastro said the suit was filed so Illinois residents who have played daily fantasy sports for years will know they can continue to "enjoy the fantasy sports games they love.''

Illinois law allows contests with prizes awarded for skill, the DraftKings lawsuit argues, and the entry fees that the company charges to participate aren't bets or wagers. Contestants use "their strategic know-how and ingenuity to select'' a winning lineup, the lawsuit states.

The DraftKings lawsuit asks the court for an expedited opinion declaring that fantasy games do not constitute gambling by Illinois law and nullifying Madigan's Wednesday opinion letter.

Madigan's action "has set off a chain of events that -- if unchecked -- will unjustly destroy a legitimate industry,'' the DraftKings lawsuit filed in Cook County Circuit Court in Chicago contends. The Illinois decree followed decisions in New York and Nevada to ban the online sites for the same reason.

A Madigan spokeswoman said the attorney general's office would have no comment on the companies' lawsuits outside of Wednesday's opinion. The courts were closed Thursday evening for the Christmas holiday.

New York-based FanDuel teamed with Head2Head Sports LLC., a company that offers season-long fantasy games among its products, in the Thursday complaint against Madigan filed in Sangamon County Circuit Court. The state capital of Springfield is located in Sangamon County, and state lawmakers there will consider a measure to regulate the contests.

For the most part, states reviewing the legality of daily fantasy sports have avoided addressing the season-long version of fantasy sports.

FanDuel's complaint seeks injunctive relief to prevent the attorney general from banning the sites in Illinois. Madigan has asked DraftKings and FanDuel to amend their terms of use to include Illinois as a banned state. As of Thursday evening, Boston-based DraftKings said on its site that residents in Arizona, Iowa, Louisiana, Montana, Nevada and Washington are ineligible for prizes. According to industry research firm Eilers Research, Illinois has one of the largest daily fantasy player bases in the nation.Illinois residents make up 10 percent of DraftKings customers, according to the court filing.

In a statement, FanDuel said it disagrees with Madigan's opinion and asks a court to "confirm that fantasy sports are lawful under current law and give clarity to the millions of fantasy sports players in Illinois."

"For now, we intend to continue offering play in Illinois until there has been a decision from a court on our lawsuit," the FanDuel statement said.

In her opinion letter, Madigan pointed out that while state law allows prizes or compensation for "actual contestants," that doesn't include fantasy gamblers.

"Persons whose wagers depend upon how particular, selected athletes perform in actual sporting events stand in no different stead than persons who wager on the outcome of any sporting event in which they are not participants," Madigan wrote.

Democratic Rep. Mike Zalewski of Riverside is pushing legislation to legalize and regulate the contests. His proposal would require players to be 18 and allow sites to review players for child support or tax debts.

ESPN Chalk's David Purdum and The Associated Press contributed to this report.

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