Delaware to Fan Duel/Draft Kings: ‘Cease operations’

Fantasy sports contests that offer cash prizes and cost money to participate in are not permitted under Delaware law. 

This week, the Delaware Department of Justice sent formal notice to Draft Kings, Fan Duel and Yahoo that Delaware law prohibits online fantasy sports contests. In their notice, the Department highlighted the state Constitution’s Article II, Section 17 which prohibits “[a]ll forms of gambling” except “(a) Lotteries under State control.”

The companies were notified earlier this year about the illegality of their operations in Delaware, but the Delaware Attorney General Matt Denn’s office didn’t take any formal action against Draft Kings or Fan Duel because of the company’s claim that a measure that would change state law would be considered by the General Assembly. Now that the state legislature has ended it’s session without any measure concerning the fantasy sports companies, Denn’s office moved forward with its formal request. 

House Bill 444, which would have legalized these fantasy contests with cash prizes, was introduced just days before the end of the legislative session on June 30. After being introduced on June 28, HB 444 approved by the House Gaming and Parimutuels Committee, but never came up for a vote on the House floor. According to that legislation, an estimated 100,000 Delawareans participate in some form of fantasy sports games. The legislation would have added a 15.5% tax on the companies revenue in Delaware.

Delaware is one of the few states in the nation where sports betting on NFL games is legal and run by the state.