City prosecutor demands FanDuel, DraftKings cease Oahu operations

Prosecuting Attorney Keith M. Kaneshiro sent letters Monday to the chief executive officers of FanDuel and DraftKings demanding that the companies cease operations on Oahu.

The letters were sent to DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles. A copy of the letter to Robins can be viewed at the bottom of this post.

They come after an opinion by Attorney General Douglas Chin that states the websites constitute illegal gambling:

“They are ‘contests of chance’ because chance is a material element for most people participating in them. Haw. Rev. Stat. § 712-1220 (2014). Alternatively, the contests involve ‘future contingent events’ because they depend on the actions of athletes entirely outside the participants’ influence or control.”

“Gambling is illegal in Hawaii, and on January 27, 2016, the state Attorney General issued a formal advisory opinion confirming what I have long believed: That daily fantasy sports contests are a form of gambling and violate Hawaii statutes,” Kaneshiro wrote. “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 told KHON2 he started to notice the sites via advertisements at the beginning of the football season. Since gambling is illegal in Hawaii, he says by taking bets from Oahu residents, the sites are committing a crime, and so are the people placing the bets.

Residents KHON2 spoke with had differing opinions.

“It’s illegal and if it’s illegal, it’s illegal. It should be stopped,” said Oahu resident Shari Anthony.

“On Oahu, I know that there is a lot of gambling going on already, and there is a lot of revenue that is being lost by the state by not allowing legal gambling,” said Oahu resident Carl Richards.

Kaneshiro says he hasn’t received a response from the companies yet, and expects the companies to self-police and not operate in states where gambling is illegal.

“We do not know for sure that the sites are operated here on Oahu. We know people on Oahu who have placed bets on the sites,” Kaneshiro said.

Kaneshiro says promoting gambling is a felony with up to five years in prison.

In response, DraftKings’ attorney issued the following statement:

“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.”

— David Boies, Counsel to DraftKings and Chairman, Boies, Schiller & Flexner LLP

Last week, a spokesperson for Fanduel told KHON2:

“FanDuel’s fantasy sports contests are games of skill, which we believe are and have always been legal under Hawaii’s laws. We strongly disagree with the Hawaii Attorney General’s understanding of fantasy contests and this advisory opinion. The fantasy sports industry is fully committed to working with lawmakers across the nation, including Hawaii, to codify consumer protections and safeguard fantasy contests for sports fans everywhere. We are encouraged by legislative proposals in the Hawaii Legislature that would create a regulatory structure for the state’s residents to continue playing the fantasy sports they have enjoyed for so long. Many states are following suit. Today alone, a bill in California was passed in the state’s assembly and a pair of bills in Florida passed in two senate committees. We will work tirelessly to ensure this momentum continues and that fantasy sports are available for sports fans everywhere.”

As for other Hawaii counties, Kauai’s prosecuting attorney says he is reviewing the issue and evaluating options.

Meanwhile, Maui prosecutor John Kim told KHON2 he has no plans to issue any cease-and-desist letters at this time. “I understand, and I believe the Daily Fantasy Sports organizations understand, Attorney General Doug Chin’s opinion regarding this activity. I suspect very soon these organizations will adjust their business practice by not accepting any Daily Fantasy Sports activity from the State of Hawaii, as well as, the island of Oahu,” he said.

We also reached out to Hawaii Island’s prosecuting attorney, but have not heard back.


Dear Mr. Robins:

This letter constitutes a demand that DraftKings, Inc. (“DraftKings”) immediately cease and desist from accepting wagers from residents of the City and County of Honolulu in connection with daily fantasy sports contests.

Gambling is illegal in Hawaii, and on January 27, 2016, the state Attorney General issued a formal advisory opinion confirming what I have long believed: That daily fantasy sports contests are a form of gambling and violate Hawaii statutes.

While DraftKings represents that 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 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.

Like lawmakers and law enforcement in close to a dozen states, I reject the notion that the 2006 Unlawful Internet Gambling Enforcement Act exempts fantasy sports contests from state laws as it does not define what constitutes gambling. Hawaii’s gambling laws are clear and DraftKings is in violation of those laws.

Therefore, as Prosecuting Attorney for the City and County of Honolulu, I must demand that DraftKings immediately halt accepting wagers from Oahu residents and refrain from doing further business on Oahu.

Sincerely,

KEITH M. KANESHIRO
Prosecuting Attorney

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