On Thursday, news broke that Massachusetts Attorney General Maura Healey is “reviewing” the legality of so-called “daily” fantasy sports games (“DFS”), such as those offered by industry titans DraftKings and FanDuel. This raises troubling concerns for the DFS industry because of Ms. Healey’s well-known opposition to gambling expansion (a hot-button issue in Massachusetts). During her recent campaign (she was elected in 2014), Ms. Healey said that she would be “proactive” in “combat[ing]” the challenges posed by expanded gambling and would hold the gaming industry “accountable.” She also testified before the state’s gaming commission (which she oversees) on her very first day in office, promising to make gambling enforcement “a priority.” Indeed, during her brief time in office, Ms. Healey has followed through on that promise by proposing a number of consumer protection initiatives aimed at the state’s nascent gaming industry: for example, she urged the state’s gambling commissioners to consider capping ATM withdrawals and prohibiting credit card cash advances at Massachusetts casinos. She also tried to block efforts by well-known casino magnate Steve Wynn to build a $1.7 billion casino development in Everett (near Boston) by calling for a delay in the issuance of key environmental permits.
The Possibility of an Advisory Opinion
One option for Ms. Healey would be to issue a “formal opinion” or “legal advisory.” Under Massachusetts law, the Attorney General is authorized to render formal opinions and legal advice to constitutional officers, agencies and departments, district attorneys, and branches and committees of the Legislature. During her brief time in office, Ms. Healey has not issued any formal opinions, and her predecessors have rarely exercised that authority (only seven formal opinions have been issued by the Massachusetts Attorney General since 1995, and none of them addressed gambling laws). However, the Attorney General has made much more frequent use of “advisories,” which are less binding than formal opinions but still persuasive (especially in a state with no specific laws governing fantasy sports). Given Ms. Healey’s well-known opposition to gambling expansion (one of her key platforms when she ran for office), the prospect of a formal opinion or advisory addressing the legality of daily fantasy sports looms as a strong possibility. And such an opinion, if issued, would carry substantial weight in a commonwealth that does not have any statutes, laws, ordinances, regulations or judicial opinions addressing fantasy sports.
Ramifications to the DFS Industry
By our count, there are at least 20 states that also use the predominant factor test. Should the Massachusetts Attorney General choose to issue an advisory opinion concluding that daily fantasy sports is illegal, though it would not be binding on the courts, it could have a pervasive effect across the states – especially in those also applying the predominant factor test. In those states, the Massachusetts Attorney General’s advisory opinion, whether favorable or unfavorable to DFS operators, could be used as particularly persuasive authority in analyzing DFS under their own anti-gambling or anti-lottery laws. We have already seen this happen within the last year, when one out-of-state gaming regulatory body (in Kansas) cited a Florida attorney general’s opinion in concluding that “if a fantasy sports league has a buy-in (no matter what it is called) for its managers and gives a prize, then all three elements of an illegal lottery [e.g., chance, prize and consideration] are present.” Although the Kansas regulator’s opinion was later superseded by a subsequent attorney general’s opinion and a legislative enactment legalizing fantasy sports in Kansas, the risks posed by an adverse Massachusetts Attorney General’s opinion are fairly obvious: the existence of such an opinion could lead attorney generals, gaming regulators and courts in other states to likewise conclude that certain (or even many common) types of daily fantasy sports contests are illegal.