NASHVILLE - State Attorney General Herbert Slatery says fantasy sports gambling is illegal in Tennessee and both the companies and potentially hundreds of thousands of Tennesseans who are playing are breaking state law.
The opinion comes as state lawmakers move to legalize gambling on the games offered by companies such as DraftKings and Fan Duel.
Senators last month approved the bill and the House companion measure is scheduled to come up today in the House Finance Committee.
In his opinion, Slatery said Tennessee law strictly defines gambling as prize, chance and consideration and has few exceptions.
Fantasy sports gambling does not fit into them, he says.
Companies allow participants to pick individual players from professional sports teams and create a "fantasy" teams that competes swith similar teams created by other players.
In his opinion, Slatery says that "while participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance. Namely, the participants do not control how selected athletes perform in actuality on a given day. Athletes' performances are affected by many fortuitous factors – weather, facilities, referees, injuries, etc."
Because of that, Slatery writes, "absent legislation specifically exempting fantasy sports contests from the definition of 'gambling,' these contests constitute illegal gambling under Tennessee law."
After passing the bill last month on the Senate floor, the sponsor, Sen. Jack Johnson, R-Franklin, told the Times Free Press that the companies estimate about 1 million Tennesseans play the games of chance. But proponents argue many do play for fun and aren't gambling.
Johnson argued the betting involves skill, but in his legal opinion, Slatery notes that Tennessee's "statutory definition of 'gambling' is straightforward and unequivocal. In short, 'gambling' in Tennessee means 'risking anything of value for a profit
whose return is to any degree contingent on chance,' subject to the
three stated exceptions."
The senator said at the time he and other proponents had been working with Slatery to establish that fantasy sports gambling involves some skill and thus doesn't constitute a "lottery," which is banned by the Tennessee Constitution except for the state lottery.
Tennessee does allow charitable groups to conduct raffles on a limited basis.
Johnson said, he and his attorneys did provide "guidance that they did not see fantasy sports as a lottery. That means the constitution's [issue] is OK."
But he noted "then you have to deal with it in statute. Some might argue it does" violate state anti-gambling laws. "Some might argue it doesn't."
But Slatery now says it does.
The bill would ensure it is legal. It also requires the Tennessee Secretary of State's office to set up guidelines for companies to register and charge fees to handle the process.
Johnson, who is Senate Commerce Committee chairman, also said he thinks registration would establish legal presence in Tennessee and require fantasy sports gambling companies to pay some corporate taxes to the state.
