Daily fantasy sports games — a booming, multibillion-dollar industry attracting more than 100,000 Maryland players — may not be legal under a 2012 state statute, the Maryland attorney general's office said Friday in an advisory opinion.
The games have changed and expanded so substantially since the legislature authorized fantasy sports play that the law needs immediate review by the General Assembly, according to the opinion of two lawyers in the office of Attorney General Brian E. Frosh.
"We recommend that the Legislature squarely take up the issue this session and clarify whether daily fantasy sports are authorized in Maryland," said the opinion signed by Assistant Attorney General Kathryn Rowe and Adam D. Snyder, chief counsel for opinions and advice.
Frosh did not move, as some states have, to stop residents from participating with industry leaders FanDuel, DraftKings or other large daily fantasy operators. But the opinion said it's not clear that the 2012 law permitting season-long fantasy sports play also allows daily betting.
The 22-page opinion also said the law "should have been referred to the electorate" in a ballot referendum because it could be considered an expansion of commercial gaming.
For now, Frosh said in a statement, the best course is for the General Assembly to weigh in.
"We have ultimately concluded," Frosh said, "that the 2012 law should have been the subject of a referendum, but acknowledge that there are legitimate counter-arguments and that it is unclear how a court would rule if asked to address the matter. As such, we believe that the General Assembly should take up this issue to make legislative intentions known and to clear up ambiguity."
In 2012, Maryland modeled its fantasy sports law after federal legislation. The state law, which exempts fantasy competitions from other gambling prohibitions, says fantasy games reflect "the relative skill of the participants."
The legislation was authored by former state Del. John Olszewski Jr., a Dundalk Democrat and devoted Ravens fan who said recently he plays low-wager online fantasy games against a dozen or so friends.
While the law was meant mostly to address small-scale, season-long fantasy sports games among friends, the games have rapidly evolved. The opinion noted "that daily fantasy sports have only emerged in the last few years and there are few judicial opinions — and none in Maryland — that address this new form of fantasy sports."
While most traditional fantasy competitions in 2012 covered an entire season, sites such as FanDuel and DraftKings allow customers to pick new rosters after a day's play. The potential to win — or lose — money is maximized.
The explosion of daily fantasy sites has sparked concerns in Maryland and elsewhere.
In December, state Senate President Thomas V. Mike Miller asked the attorney general's office for advice on fantasy sports gambling.
"The question triggers a complicated analysis of the nature and scope of gambling exemptions contained in the Maryland Constitution; the differences between Traditional Fantasy Sports and Daily Fantasy Sports and their evolution over time; and definitions of gambling and commercial gaming that are not found in Maryland law or court precedent," Frosh's statement said.
New York-based FanDuel and Boston-based DraftKings responded swiftly.
"We agree with the Attorney General that this is a matter for the legislature," Jonathan Schiller, counsel to DraftKings and managing partner of Boies, Schiller & Flexner LLP, said in a statement.
"By an overwhelming majority, the Maryland General Assembly passed a law in 2012 that made it clear that fantasy sports, including daily fantasy sports, are not gambling and are legal in the state. We look forward to continued engagement with lawmakers to ensure that players in Maryland and around the country can continue to enjoy our contests," he said.
FanDuel spokesman Marc La Vorgna said: "We want to work with any officials in the state to answer any questions about our game and to ensure the millions in Maryland who love fantasy sports can continue to play."
Miller and state House Speaker House Michael E. Busch declined comment.
"Everybody was waiting on the attorney general and then we'll see where things go," said Del. Eric Luedtke, a Montgomery County Democrat and co-chair of the joint gaming committee. "There will be lots of discussions and meetings over the next couple weeks to figure out what comes next. I definitely hear from constituents that play and want it to remain legal. It's popular, especially among millennials."
In fantasy games, participants select or "draft" actual players in football and other sports, accumulating points based on the players' statistical performances. The game-within-a-game has become an integral part of the baseball and football seasons for an increasing number of area fans. Today, the sites offer payouts based on players' performances after individual games, not just an entire season.
More than 100,000 Marylanders who have played on the FanDuel or DraftKings sites have received company emails in recent months urging them to register their support for the games with the state, according to an industry trade group.
In advance of the opening of the General Assembly session this week, FanDuel and DraftKings retained Maryland lawyer Frank Boston III and officials from the Annapolis firm Perry, White, Ross & Jacobson as lobbyists. FanDuel retained Baltimore attorney Stephen Martino, former director of the Maryland Lottery and Gaming Control Agency, to work on regulatory and legal issues.
Officials in other states have acted against FanDuel and DraftKings.
The two companies face a legal challenge from New York Attorney General Eric Schneiderman, who ordered them to stop taking what he says are illegal wagers under that state's law. He also wants the companies, which maintain that their operations are legal, to return profits made in the state.
Nevada has limited daily fantasy sports to operators with gambling licenses. In Illinois, FanDuel and DraftKings are challenging Attorney General Lisa Madigan's assertion that the games are a form of illegal gambling.
FanDuel said in ads in 2015 that it would pay out an "expected $2 billion in real cash prizes this year," while DraftKings advertised "More than $1 billion guaranteed."