Industry Updates

Rhode Island AG: Fantasy Sports Contests Are Legal

Rhode Island Attorney General Peter Kilmartin handed the daily fantasy sports industry a much-needed win on Thursday. In a letter addressed to Governor Gina Raimondo, Senate President M. Teresa Paiva Weed and Speaker Nicholas Mattiello, Kilmartin declared that fantasy sports contests are legal under Rhode Island law.

The letter explains that based on Rhode Island statutes and case law, fantasy sports do not meet the state’s definition of illegal gambling – mostly thanks to the element of skill required to win fantasy contests. In Rhode Island, games of chance are outlawed outright while lotteries are outlawed if not conducted by the state.

In determining whether a game meets the state’s definition of a lottery in Rhode Island, three factors need to be present: consideration, prize and chance. Fantasy contests certainly have a consideration (the money people pay to enter contests) and prize element, but the chance element only applies if a game is dominated by chance.

Ultimately, the AG found that skill plays enough of a role in fantasy sports contests that they are legal in Rhode Island. The fantasy sports industry needed to see some good news after losing Hawaii, and they got it in Rhode Island today.

Today’s news shows that the fight for legal daily fantasy in the US is far from over. We have states such as Kansas and Rhode Island declaring fantasy sports legal, while in New York and Hawaii, attorneys general have issued cease and desist orders.

AG Calls for Regulations

Peter Kilmartin also noted the need for legislation to regulate the fantasy sports industry to protect problem gamblers, ensure the safety of the industry, keep minors out and collect tax revenue. He put it this way in the letter:

“Despite daily fantasy sports being legal, I believe there should be strict regulations imposed on the operation of these sites to address the issues we have experienced with gambling in Rhode Island, including infiltration of the criminal element, youth participation, and addiction issues.”

In the meantime, fantasy sites are free to continue operating in Rhode Island. It would be a safe bet that any regulations that are implemented in Rhode Island will look similar to proposals that have been put forth by lawmakers in other states.

In most of the draft bills we’ve seen to date, lawmakers have specified how contests must be run to avoid classification as illegal gambling and either created new departments or directed existing government agencies to oversee the industry for fairness and compliance. Other stipulations have included having fantasy sites submit to annual audits, keep players’ funds separate from operating funds and to pay fees, taxes or both to the state.

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