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Fantasy sports put in limbo in Illinois

DraftKings, state face long legal battle

Fantasy sports sites such as DraftKings are facing scrutiny in several states.Photo illustration by Scott Olson/Getty Images/Getty

DraftKings Inc. is again facing a monthslong court battle, this time in Illinois, while the legal status of its daily fantasy sports contests for cash there remains in limbo.

Tuesday, the Boston-based company and Illinois Attorney General Lisa Madigan agreed to a schedule that could push any resolution of their dispute well into the summer. The agreement is part of a lawsuit DraftKings filed against Madigan to counter her determination last week that its games are a form of illegal gambling.

It's not clear which side will make the next move. Madigan has not signaled whether she will try to enforce her opinion, unlike her New York counterpart Eric Schneiderman, who quickly filed a complaint seeking to shut down DraftKings in his state after determining its contests were illegal in November.


Instead, Madigan has until Jan. 22 to reply to DraftKings' lawsuit, which sought to restrain her from moving against the company.

In the meantime, DraftKings will continue to operate in Illinois, in defiance of Madigan's designation of its contests as illegal.

"We are pleased that we have reached agreement with the Illinois attorney general's office today on an expedited court schedule for determining the legality of the daily fantasy sports contests that DraftKings is offering in Illinois," a DraftKings spokeswoman said in a statement.

"We remain committed to providing daily fantasy sports to the hundreds of thousands of loyal Illinois fans who love the game, and we look forward to our day in court, where we are confident we will prevail," the statement said.

A spokeswoman for Madigan's office said the attorney general was in discussions with DraftKings' main rival, New York-based FanDuel Inc., over scheduling hearings in a similar lawsuit that company filed in another county court last week.

DraftKings' decision to continue operating amid the uncertainty in Illinois is a gamble, according to Jeff Ifrah, a Washington-based gaming attorney who has represented fantasy sports companies.


"DraftKings is operating at their own peril now. If Madigan's reasoning is upheld later on, that could be problematic in terms of damages" or other consequences, Ifrah said. "On the other hand, it reflects on their good faith that they believe in their arguments, believe their games are legal, and are willing to go to court and let the chips fall where they may."

Either way, Ifrah said, DraftKings is being treated differently than others accused of similar violations of Illinois gambling laws.

"Illegal card games, sports betting pools in peoples' basements, bookies on the street — they'd all be shut down immediately," Ifrah said. The relatively light handling of DraftKings is likely due to the popularity of its contests and the fact that the Illinois Legislature is pondering a bill that would exempt daily fantasy sports from the state's general gambling ban, he said.

Ifrah said he suspected the Illinois judge overseeing the DraftKings case would look skeptically at the company's arguments that it has suffered harm from Madigan's opinion and that she must be restrained. He noted that a judge in New York declined to grant a similar request by DraftKings in November.

"All you've got right now is an opinion from the attorney general saying, 'this is what I've think,' " Ifrah said. "A judge could say, 'I'm not ruling on this until the cops show up and close you down, or the attorney general files a complaint.' Otherwise there's no action pending, there's no actual controversy."


The fight in Illinois is only the latest for DraftKings, which is under scrutiny in a number of other states and by federal prosecutors. In Massachusetts, Attorney General Maura Healey has not moved to shut down fantasy sports operators, saying that their activities are not explicitly banned under state law.

Instead, Healey has proposed a long list of consumer protection regulations, including restrictions on the companies' advertising and beginner-only games that keep new players sequestered from highly experienced competition.

Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.