On April 16, 2020, the Supreme Court of the State of Illinois (the “Supreme Court”) rejected a claim that online fantasy sports constitute illegal gambling under the State’s criminal code. In Dew-Becker v. Wu, the plaintiff initiated suit seeking to recover the $100 he had lost to defendant in a fantasy basketball league on FanDuel. Plaintiff based his lawsuit on a section of the State’s criminal code that allows individuals who lose money through illegal gambling to seek recovery from the winner. The trial court, the intermediary appellate court, and ultimately the State’s highest court, all rejected the plaintiff’s attempt to shoehorn this criminal statute into a case involving fantasy sports law.
What did Plaintiff allege?
Fantasy Sports Law and Gambling
According to the pleadings and the record on appeal, the plaintiff and defendant each voluntarily paid $109 to FanDuel to enter a head to head daily fantasy basketball league. Each player selected college and professional basketball players and earned points based on how well their selected players performed on a given day. At the end of the season, whichever participant had the most points was declared the winner. At trial, plaintiff explained that he understood that the winner would receive $200, FanDuel would keep $18, and the loser would receive nothing. Plaintiff sought to recover the $100 he had lost under Section 28-8(a) of the Illinois Criminal Code, which reads in relevant part:
Any person who by gambling shall lose to any other person, any sum of money or thing of value, amounting to the sum of $50 or more and shall pay or deliver the same or any part thereof, may sue for and recover the money or other thing of value, so lost and paid or delivered, in a civil action against the winner thereof, with costs, in the circuit court.
Analyzing Fantasy Sports as Games of Skill
The Illinois Supreme Court began its analysis by noting that this case turned on a simple issue of statutory interpretation, which it, therefore, considered de novo. Although a 2019 law significantly expanded legalized gambling within the State, that law did not affect the State’s fantasy sports law, and was, therefore, not analyzed by the Supreme Court. According to the Supreme Court, the plain meaning of the Criminal Code required the plaintiff to establish that he had lost money while “gambling.” Because the statute also included an exemption for games of skill, the Supreme Court was tasked with developing a test to differentiate between illegal gambling and games of skill.
The Supreme Court recognized that courts across the country use several different tests to address this issue. After discussing the various tests in its opinion, the Supreme Court decided to adopt the “predominant factor test,” which is popular in many other state jurisdictions. Pursuant to this test, a court asks whether the outcome of a game is predominantly determined by chance or skill. According to the Supreme Court, the daily head to head fantasy sports game at issue was a game of skill. This position was supported by peer-reviewed literature cited by the Supreme Court finding that skilled participants consistently outperform unskilled competitors in fantasy sports contests. Accordingly, the criminal statute relied upon by plaintiff did not change the current state of fantasy sports law in Illinois, and the plaintiff’s claim was properly dismissed.
Across the country, fantasy sports law is constantly evolving. The Illinois Supreme Court’s decision should be viewed as a significant win for the industry. Even with the State’s 2019 expansion of legalized gambling, it was still unclear whether fantasy sports even constituted gambling. Fantasy sports operators were, therefore, operating in the State without critical certainty. While this decision clarified the state of the law in Illinois, courts in other states often issue less favorable decisions that could negatively impact fantasy sports operators and their respective customers. Given the whirlwind of new laws affecting fantasy sports in different jurisdictions, businesses should work with knowledgeable legal counsel to become/remain compliant with applicable state and federal laws when operating fantasy sports contests.
If you are interested in setting up a fantasy sports business, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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