Inside Asian Gaming

september 2016 inside asian gaming 69 Gambling and the law is interpreted under state and federal laws, which federal statutes will come into play? The Professional and Amateur Sports Protection Act (PASPA) prohibits any state from legalizing new forms of sports betting. A state like New York might declare DFS to be a contest of skill, but a federal court is free to disregard that declaration and hold that the state is actually legalizing sports betting. This is unlikely to happen, because the suits will never be brought. Prosecutors have no interest in pursuing operators of games that have been expressly made legal by state legislatures. And no one else with standing is likely to bring suit. The sports leagues, which are expressly given the power to sue states under PASPA, are almost universally enthusiastic supporters of DFS. Only the NCAA has publicly opposed fantasy sports and it is easy to exclude collegiate athletic matches from fantasy leagues. The interesting issue is whether any federal prosecutor would want to bring charges or seek injunctions under the Wire Act. Again, the federal government is not technically bound by state law. The Wire Act in particular does not care whether the sports wagers are legal or not. However, the UIGEA expressly allows bets across state lines, so long as the bets are legal on both ends. And the Department of Justice (DOJ) itself, at its highest levels, has declared that the state can offer online gambling, such as state lotteries, and not violate the Wire Act. “It took almost a half- century for state lotteries to spread across the country. During that time, there never was a year when seven states legalized state lotteries.” The DOJ did not say that the UIGEA overrules the Wire Act when it comes to sports betting. But it does indicate that it is not likely that a federal prosecutor would attempt to prevent two state-licensed DFS operators in different states from pooling their players. Of course, both states would also have to expressly allow such pooling. Although passage of the new law makes DFS officially not gambling, it does not end the ongoing suits against FanDuel and Draft Kings. It is an interesting, theoretical question whether the NY Attorney General and state courts would be bound by the Legislature’s declaration that DFS is a contest of skill for acts that took place before SB 8153 was enacted. SB 8153 does not expressly protect DFS operators from being charged with crimes for activities that took place prior to its passage. A court could conceivably find that the defendants were violating New York’s state anti-gambling laws for years. But that is extremely unlikely, especially since the state had chosen to go the civil rather than criminal route when it moved to close down DFS. But FanDuel and Draft Kings still have to defend against the charges of misleading customers and insider trading. The New York Times quoted Attorney Eric Schneiderman as saying that “he will enforce the new law,” but adding, “The amended lawsuit will continue against Draft Kings and FanDuel alleging consumer fraud and false advertising for prior operations in New York.” Look for that suit to be settled fairly quickly – and for more state legislatures to pass laws to legalize, regulate and tax DFS.