Fact Sheet: Game or Gamble?: Daily Fantasy Sports Contests and Hawaii's Gambling Laws
Last week, Attorney General Douglas Chin delivered Attorney General Opinion No. 16-1 finding that daily fantasy sports contests, including FanDuel and DraftKings, are illegal under Hawaii's current gambling laws. Today, Honolulu Prosecutor Keith Kaneshiro sent "cease and desist" letters to both companies demanding that they "immediately halt accepting wagers from Oahu residents."
In response to the decision, Rep. Beth Fukumoto Chang stated, "I've always been supportive of Hawaii's strong anti-gambling laws, but I also think our state can be too quick to over-regulate new technologies. My hope is that the Legislature will be able to take up this issue and hear from our constituents before accepting, on its face, the Attorney General's blanket prohibition."
Daily fantasy sports contests are competitions between hundreds or thousands of people, played daily, and players can be picked up an unlimited number of times with wagers of up to $1,000 and winnings of up to $1 million.
Daily fantasy sports contests are specifically exempted from federal law and are a matter of state law.
Gambling has been outlawed in Hawaii since, at least, 1850.
Why are daily fantasy sports contests considered illegal under current law?
Daily fantasy sports contests are considered gambling because the entrance fee is "something of value" that is "staked" (Hawaii Revised Statutes § 712-1220).
Daily fantasy sports contests are considered "contests of chance," where the "outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein" (Hawaii Revised Statutes § 712-1220).
While some argue skill rather than chance is involved, a Hawaii Supreme Court case found that the standard is based on the average player, not an expert. The Attorney General's opinion finds that the average participant in daily fantasy sports contests is reliant upon the chance outcome of the game.
Difference in Traditional Fantasy Sports Leagues
The Attorney General's opinion does not address traditional fantasy sports leagues, which are loosely described as "a group of friends or colleagues (about 12 persons)…who each 'own' their fantasy teams," start with a draft, and are paired against each other each week.
Typical total pots are around $600 for winnings.
Is the Attorney General's opinion final?
The Attorney General's opinion is final unless it's challenged in court or unless the Legislature specifically exempts daily fantasy sports contests from Hawaii's gambling laws.
House Bill 1838 and Senate Bill 2722, if passed by the Legislature, would regulate but allow daily fantasy sports contests in Hawaii.