By R. Joseph Leibovich
March Madness is over, and many are weeping over their busted brackets. But could fantasy sports participants be facing something worse than picking a first round Villanova loss? In Tennessee, theoretically, they could also face criminal charges.
Tennessee Attorney General Herbert Slatery on April 6 issued an opinion holding that all fantasy sports are illegal in the state.
According to the opinion:
Fantasy sports contests fall within the broad definition of “gambling” under Tennessee Code Annotated § 39-17-501(1). The participants pay an entry fee in order to win a prize. A portion of the fees comprise the pot of funds that are paid out to the winning participants. By proffering these entry fees, participants agree to risk something of value for a profit – a portion of the pot. Hence, the only remaining consideration is whether a participant’s ability to win a fantasy sports contest is to “any degree contingent on chance.” While participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance. Namely, the participants do not control how selected athletes perform in actuality on a given day. Athletes’ performances are affected by many fortuitous factors – weather, facilities, referees, injuries, etc.
As a result:
…absent legislation specifically exempting fantasy sports contests from the definition of “gambling,” these contests constitute illegal gambling under Tennessee law. The General Assembly has the power to exclude from the definition of “gambling” any fantasy sports contest that is not prohibited by the state constitution or the federal constitution…
This opinion was requested by Tennessee House Minority Leader Craig Fitzhugh (D-Ripley), presumably to determine how to deal with online fantasy sites such as DraftKings and FanDuel. Many states have addressed daily fantasy contests (which are the heart of those sites), but the Tennessee opinion is broader than many other opinions in that it applies to all fantasy sports (or, presumably, all those involving entry fees), including season long contests. This could apply to sites such as ESPN, CBS and Yahoo as well as the daily contest sites.
An Attorney General opinion is not in itself law. It is an interpretation. However, such interpretations can be given weight by the courts or legislature.
And, it is possible this opinion could trigger the legislature to carve out some form of fantasy exemptions.
In the meantime, however, how should Tennessee employers deal with this? Many offices condone March Madness brackets. And, throughout the country, millions of people participate in various forms of fantasy sports. Is it likely that the police are going to raid your office because of an NCAA pool?
But, this could create an uncomfortable issue for employers who have policies against illegal activities at work. Do you continue to condone or even encourage the brackets which can be fun and morale building? Or do you take a hard line approach so as to be consistent in applying policy?
Some employers are already torn on this issue due to the perceived or actual productivity sink fantasy sports causes. Some studies show that fantasy football costs companies as much as $16 billion a year in lost productivity. While others say the loss is certainly less than that and office fantasy sports can be a great team building experience.
In employment law, we often have to wear two hats – lawyer and Human Resources advisor. If strictly wearing the lawyer hat, I’d have to say that in Tennessee and other states with opinions or legislation declaring fantasy sports illegal, employers should absolutely not allow or condone participation in those activities at or through work. Failure to ban such activities could lead to an argument that your anti-illegal activity policies are not consistently applied and could arguably lead to a disparate treatment claim at some point.
The Human Resources hat answer is probably a little more complicated.
For now, however, employers in Tennessee should at least be aware of the fact that the Attorney General has opined that fantasy sports – all fantasy sports – are illegal in the state. At least until the legislature acts. And, I won’t lay odds on whether or not that will happen, as fantasy legislature contests are probably in the same bracket as fantasy sports.
The above article is meant to be a general discussion and is not intended to be legal advice. For specific legal advice, contact an attorney.