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NCAA Bans DraftKings, Legality of Site Under Investigation in MA

Monday, September 28, 2015

 

The Boston-based fantasy sports site DraftKings, which awards daily and weekly prizes up to $10 million, is finding opposition on two fronts.

Last week, Massachusetts Attorney General Maura Healey announced that her office would be conducting an investigation into DraftKings’ legality and whether or not its meets the criteria to comply with state laws on online betting.

In her latest column for GoLocalWorcester, AiVi Nguyen, a business and trial lawyer with the Law Firm of Bowditch & Dewey, LLP wrote, “The question is whether what DraftKings does is considered illegal online betting or not. In order for DraftKings to operate in a state, it must comply with both state and federal law regarding online betting. DraftKings does not comply with Arizona, Iowa, Louisiana, Montana and Washington state law and residents from those states are ineligible.”

Just days after AG Healey’s announcement, the NCAA ruled that DraftKings, and sites like it, will be considered gambling under their student code of conduct.

In a statement released to Re/code, the NCAA said,  “NCAA members schools have defined sports wagering as putting something at risk — such as an entry fee — with the opportunity to win something in return, which includes fantasy league games. Because of this, student-athletes, coaches, administrators and national office staff may not participate in sports wagering, including fantasy league games with a paid entry fee.”

If a student is found to be wagering on DraftKings, that student will automatically lose one year of eligibility.

According to Nguyen, right now the Attorney General’s investigation is “exploratory.” Nguyen argues that the AG’s office should be interested in DraftKings because of the amount of money it raises and spends.  

“It has been reported that DraftKings is a $1.2 billion company that raised $375 million from venture capital funding and spent $81 million in advertisements since August 1, 2015,” Nguyen wrote.

DraftKings at Gillette Stadium

As GoLocalWorcester reported last month, the New England Patriots and DraftKings opened a Fantasy Sports Lounge at Gillette Stadium - the first gaming venue at an NFL stadium in history.

One could argue that the DraftKings lounge itself could be considered a gaming establishment due to the fact that people are playing a game for money and using a provided device.

However, due to the U.S. government’s 2006 Unlawful Internet Gambling Enforcement Act which stipulated that fantasy sports were legal, the New England Patriots and NFL are allowed to promote sites such as DraftKings throughout their stadium.

In an email to GoLocalWorcester, when asked if the lounge could violate Massachusetts gaming laws, NFL spokesperson Brian McCarthy briefly stated that the DraftKings lounge at Gillette “isn’t an issue” and that all 32 NFL teams have the opportunity to have such an area in their stadiums.

 

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