NASHVILLE — The fantasy sports industry scored the ultimate money-making touchdown this week in Tennessee.
Without fanfare, Gov. Bill Haslam signed a bill pushed by online giants DraftKings and FanDuel allowing the companies and approximately 1 million Tennessee players who are already participating to do so legally. The legislation will create an exemption from state anti-gambling provisions. Lawmakers passed the bill in mid-April.
Sponsored by Sen. Jack Johnson, R-Franklin, and Rep. Pat Marsh, R-Shelbyville, the legislation was pushed by the companies here in anticipation of legal trouble after attorneys general in a number of states, including New York, Texas and Nevada, ruled fantasy sports violated their laws.
In fantasy sports, a player pays an entry fee, ranging from spare change to several thousand dollars, to create an imaginary team made up of real professional athletes. Teams can be based on various sports, including football, basketball and hockey. How well players do depends on how well their athletes fare against other contestants. Prizes can reach as high as $300,000, according to Bankrate.com.
A number of websites like cbssports.com allow people to play for free.
Not long after the bill initially passed the Tennessee Senate, state Attorney General Herbert Slatery issued an opinion declaring that fantasy sports are indeed gambling — and illegal under Tennessee law.
While proponents said the online games are based on players' skill in picking their teams, Slatery said there's an element of chance and participants stand to gain financially. He said that's gambling in Tennessee, and it's illegal. The legal opinion was requested by House Minority Leader Craig Fitzhugh, D-Ripley.
Early on, DraftKings and FanDuel were taking no chances.
According to filings with the Tennessee Ethics Commission, they hired McMahan Winstead, a Nashville lobbying firm whose clients have included tobacco companies, liquor stores and payday lenders. The companies also enlisted Washington, D.C., lobbyist Scott Ward, who serves as government affairs counsel for the law firm Orrick. And DraftKings hired former House Democratic Caucus Chairman Mike Turner.
At least eight lobbyists were registered to speak on the bill.
Steve Brumfield, a Nashville-based public relations specialist hired by the companies, claimed the bill had nothing to do with fixing the state's illegal gambling problem in Tennessee law. He said the issue was being misrepresented even after Slatery's legal opinion was issued.
"The point is, after the bill is passed, it won't be gambling," Brumfield said in an April 6 email when asked about Slatery's opinion. Brumfield likened it to the state lottery, which, after more than a decade, was finally sent to state voters, who snapped it up in 2002, making it legal through an amendment to the Tennessee Constitution.
"The lottery is 'legalized gambling,'" Brumfield said. "If the bill passes, it will exempt fantasy sports from the definition of gambling. So a statement that after the bill passes, Tennesseans can now legally bet on fantasy sports or that 'fantasy sports gambling' is legal is factually incorrect."
Rather, Brumfield said, "it would be correct to say that an activity that has existed in TN for 30 years without issue has now been determined to be gambling by the AG, and the bill will make clear that skill-based fantasy sports are not gambling in the state of Tennessee."
Not everyone was buying that.
During a sometimes heated mid-April debate in the House Finance Subcommittee, bill opponent Rep. David Alexander, R-Winchester, suggested the chairman of the panel get a law enforcement official to arrest "various people for breaking law and promoting gambling," according to an account in The Tennessean.
Moreover, Alexander said, bill supporters and the squad of lobbyists pressing the legislation might even be subject to arrest.
Rep. Curry Todd, R-Collierville, charged that Alexander's assertion was "asinine." The committee's attorney informed lawmakers that discussing the legislation was not really soliciting players, which would be violating the state's gambling laws.
The bill passed the panel and the full Finance Committee and ultimately the House floor on a 67-17 vote with three abstentions. Senators earlier passed the bill on a 29-1 vote and later approved it again after the House amended the measure.
According to the General Assembly's website, House members giving their blessings to the fantasy sports bill included Rep. Jerry Sexton, R-Bean Station, and on the first Senate vote, Sen. Steve Southerland, R-Morristown.
Contact staff writer Andy Sher at firstname.lastname@example.org, 615-255-0550 or follow via Twitter at AndySher1.