Honolulu Prosecuting Attorney Keith Kaneshiro has asked FanDuel and DraftKings to stop operating their daily fantasy sports contests on Oahu, his office said Tuesday.
Cease-and-desist letters were sent to the chief executive officers of the companies Monday less than a week after state Attorney General Doug Chin issued a formal advisory opinion saying that daily fantasy sports contests are a form of gambling and violate Hawaii statutes.
“Therefore, as prosecuting attorney for the City and County of Honolulu, I must demand that (Draft Kings and FanDuel) immediately halt accepting wagers from Oahu residents and refrain from doing further business on Oahu,” Kaneshiro wrote in letters sent to the companies Monday.
Boston-based DraftKings said Tuesday it would comply with the request.
“While we disagree with the attorney general’s opinion because daily fantasy sports are games of skill permitted under Hawaii law, we are hopeful our constructive engagement with Hawaii legislators will promptly address the issue so that our loyal fans can continue to enjoy the games they love without anyone questioning the legality of their conduct. In the meantime, we will voluntarily pause operations in the state but hope to resume soon,” DraftKings attorney David Boies said in an email.
FanDuel, headquartered in New York, declined to comment.
Hawaii lawmakers have introduced several bills that would make daily fantasy sports legal.
Two of the bills, Senate Bill 2722 and House Bill 1838, were proposed by the fantasy sports industry, according to Sen. Gil Keith-Agaran (D, Waihee-Wailuku-Kahului), who introduced the Senate version.
The bills not only authorize fantasy contests, but regulate them as well, requiring contest operators to submit an annual audit, register with the state and pay a $25,000 application fee. The bills also offer some consumer protections, such as requiring operators to verify that customers are at least 18 years old.
Daily fantasy sports contests have mushroomed into a multibillion-dollar industry in recent years, led by FanDuel and DraftKings.
Customers of the fantasy sports websites pay to play, typically putting together rosters of real players in hopes of winning cash prizes based on the cumulative performance of their roster.
Kaneshiro said that while DraftKings contends its contests are games of skill because players select their lineups, Hawaii law specifically states that “a contest of chance means any contest, game, gaming scheme, or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.”
The law, he noted, goes on to say that “a person engages in gambling if he states or risks something of value upon the outcome of a contest of chance.”
“Further, by advancing a contest of chance, accepting wagers from Oahu residents and profiting from those payments, DraftKings is promoting gambling under Hawaii laws,” Kaneshiro wrote in his letter to DraftKings CEO Jason Robins.
In issuing a formal advisory opinion last week, Chin said his office is considering pursuing criminal or civil enforcement actions against companies operating the websites.
Attorneys general in New York, Illinois and Texas have also said the industry’s contests are illegal under their state laws, while fantasy-sports contests are already illegal in Arizona, Iowa, Louisiana, Montana and Washington.
Lawmakers in Massachusetts, meanwhile, are moving to tax and regulate the industry.
Chin’s opinion does not apply to “traditional” fantasy sports, in which people play in leagues with friends and colleagues. That kind of fantasy sports, he said, is considered “social gambling,” which is legal in Hawaii. In social gambling the house takes no profit either directly or indirectly through fees, food sales or other charges.
With no casinos, poker rooms, bingo halls, racing tracks or lottery, Hawaii has some of the stiffest gambling laws in the country. Under Hawaii law, promoting gambling can constitute a Class C felony, punishable by up to five years in prison and a fine of up to $10,000.
