Tennessee Signs DFS Bill, tells operators Apply for License or Get Out

The drama surrounding daily fantasy sports in the US continues this week as Alabama residents prepare for DFS sites DraftKings and FanDuel to cease acceptance of players in the state by end of day today. In the meantime, Tennessee Governor Bill Haslam officially legalized the online betting activity when he signed a DFS bill last week, calling for licensure.

In early April, Tennessee’s Attorney General Herbert Slatery issued an official opinion that daily fantasy sports is a form of illegal gambling in the state. His opinion was based on the fact that gambling is “broadly defined under Tennessee law”, and that DFS falls in line in wagering “anything of value for a profit whose return is to any degree contingent on chance.”

By mid-April, SB-2109, a DFS bill designed to legalize the activity via licensure and regulation, had already been drafted. It easily passed through the Senate by a vote of 29-1, and Gov. Haslam made quick work of the measure by signing it into effect last week.

Formally known as The Fantasy Sports Contest Act, the legislation creates an advisory task force, as well as the Tennessee Fantasy Sports Commission, in charge of regulating DFS. Daily fantasy sports operators have until July 1, 2016 to comply with the new law, by either ceasing acceptance of state residents, or applying for a license.

Operators who apply for a license will be subject to a 6% tax on gross gaming revenue. However, the DFS bill does not designate the cost of licensing fees. The price tag is yet to be determined by state lawmakers, and will surely have an impact on how many brands choose to remain active in the state.

Time’s Up for DFS in Alabama

As Tennessee prepares for an influx of license applications, DFS fans in Alabama are saying a fond farewell to DraftKings and FanDuel. The two largest daily fantasy sports operations in the US will be pulling out of the state’s market by the end of today.

When Alabama Attorney General Luther Strange opined that DFS was illegal gambling by state law on April 5, he sent out cease and desist orders to both operators, requesting that they comply with his decision by May 1, 2016.

While DraftKings and FanDuel have vowed to continue their push for legalization of the online betting activity, each delivered notices of acquiescence to the Attorney General, agreeing to cease operations by the given date. They also agreed to process all requests for account withdrawals by users with Alabama-based IP addresses within 7 days of receipt.

“As Attorney General, it is my duty to uphold Alabama law, including the laws against illegal gambling,” said AG Strange. “The daily fantasy sports operations violate state law because a player stakes something of value on a contest of chance in order to win a prize.”

While he admitted “there is a measure of skill involved in creating a fantasy sports roster, in the end contestants have no control over the performance of the players on their rosters.” Therefore, he came to the conclusion that DFS “is illegal under Alabama law.”

Unlike Tennessee, there is no push for a DFS bill in the Alabama State Legislature to regulate the activity.