Daily Fantasy Sports Illegal in Vermont

Daily fantasy sports (DFS) players in Vermont may soon earn something they hadn’t bet on: a substantial fine. On Jan. 15, the Vermont Attorney General’s Office said that betting on DFS was illegal in Vermont.

Popularized on websites Draft Kings and FanDuel, players of DFS accumulate points based on the performances of real-life athletes. The games violate a Vermont antigambling statute prohibiting players from winning or losing money or other valuables “by play or hazard at any game.”

Also on Friday, State Senator Kevin Mullin (R) proposed bill S.223, which would provide a pathway to legalization of DFS in Vermont. The bill bars Vermonters under 18 years old from playing, increases fines to $1,000 for each violation. Additionally the bill bars the operators of the gambling sites from competition and requires the sites to undergo an independent audit every year. If the bill is passed, the new regulations will take effect on July 1.

The Vermont Attorney General’s Office opposed the bill.

“Our recommendation is that you not pass this particular piece of legislation,” said John Treadwell, Chief of the Criminal Division at the Attorney General’s office. Treadwell was open to discussing existing gambling restrictions, so long as no exceptions were made for one form of gambling over another.

“Our concern is what [the legislation] does is it takes one variety of illegal, for-profit gambling and makes it legal without any consideration for why this particular one is being chosen and others are not,” he explained at the meeting.

Nationally, DFS sites are ‘legal’ because of the Unlawful Internet Gam- bling Enforcement Act (UIGEA), passed in 2006. In it, the federal government defines DFS games as games of skill. They remain legal in 44 of 50 states.

However, this legislation has repeatedly come under fire at the state level. In Illinois, for example, the state Attorney General concluded that, “entering into daily fantasy sports sites is no different than wagering on the outcome of sporting events.”

Pro-DFS lobbyists and lawyers have waged an intense campaign to protect the federal interpretation, and have attacked such rulings as naiive and misinformed.

“These attorneys general, in our experience, don’t know anything about fantasy sports,” said Jeremy Kudon, a pro-DFS attorney. “They didn’t play fantasy sports. They don’t understand how it operates, and that’s critical.”

Pro-DFS proponents argue that the billion-dollar industry is legal because drafting players and setting lineups requires an intimate understanding of each sport.

“The crux of the game is building the best lineup that you can,” said Chris Grimm, a lobbyist for the Fantasy Sports Trade Association. “And the level of skill that goes into building the lineups is very high. You have to be incredibly knowledgeable about the game, about the matchups.”

In the future, similar lobbying will most likely be focused on states where the threshold for legal DFS is lowest.

“This is a battle that’s going to be won in 50 states,” said Paul Charchian, President of the pro-DFS Fantasy Sports Trade Association during an interview with the Burlington Free Press. “It’s going to be 50 small battles, not one big battle.”

Yet, even current DFS players have begun to question the industry mantra. In an article for the New York Times Magazine,ex-player Jay Kang eviscerated DFS, explaining his sense of disillusionment after discovering the competitive disadvantage that he faced. Most successful players, Kang explained, use optimization software that allows them to edit thousands of lineups simultaneously.

“In the game lobbies of DraftKings and FanDuel,” he explains in the article, “sharks are free to flood the marketplace with thousands of entries every day, luring inexperienced, bad players into games in which they are at a sizable disadvantage.”

“The idea that these sites exist so that regular guys can make a lot of money playing daily fantasy sports is a lie,” said Gabriel Harber, a well known DFS podcaster and player, in the same article. “FanDuel and DraftKings are optimized for power players to rape and pillage regular players over and over again."

At the end of the piece,Kang emphasized that DFS are not inherently crooked.

“All that’s required,” wrote Kang, “is a transparent marketplace in which a player can reasonably expect to enter a head-to-head or 50-50 or even one of the big-money tournaments without going up against hundreds of lineups generated by professional gamblers who have been lying in wait for him.”

In Vermont, the debate between pro and anti-DFS advocates is inconsequential. Betting on either games of skill or chance has long been illegal. “Daily fantasy sports violate Vermont’s gambling laws,” said Treadwell, Chief of the Criminal Division at the Attorney General’s office. “Vermont has very strict long-standing limitations on gambling."

The state has not yet taken legal action against DFS fantasy companies.