Win Money at Fantasy Sports, Go to Jail

Thousands of Michigan residents who participate in online fantasy sports games could be breaking state laws against gambling, but the officials responsible for enforcing those laws are reluctant to clarify whether the practice is prohibited.

The issue entered the news when New York’s Attorney General Eric Schneiderman asked a court there to shut down the fantasy sports websites DraftKings and FanDuel in his state.

Besides online fantasy sites, many Michigan residents compete in workplace fantasy leagues with friends where participants compete for money prizes.

In Michigan, state Sen. Curtis Hertel Jr., D-Meridian Township, has introduced a bill to decriminalize fantasy sports. Senate Bill 459 was sent to the Senate Judiciary Committee, which is chaired by Sen. Rick Jones, R-Grand Ledge.

Jones said he told Hertel the bill won’t be considered unless the state’s Indian tribes sign off. His concern is that the tribes would stop sharing with the state a portion of their casino earnings if lawmakers allow a competitor in the form of legalized betting on fantasy sports.

The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians withheld a $7 million payment to the Michigan Economic Development Corporation in August. The tribe believes the state violated a 2007 deal when it started operating electronic pull-tabs and an online lottery, according to published reports.

Andrea Bitely, spokeswoman for the state attorney general, said the office had no comment on whether fantasy sports games and prizes are illegal here.

“Because of our mission, we cannot offer general legal advice or answer hypotheticals about legal situations, so we have no comment on fantasy sports. I will say the attorney general’s office devotes its limited resources to priorities like violent crime, consumer protection, and victims’ rights,” Bitely said in an email. “For specific legal questions, you'll have to talk with a private attorney.”

One gambling-oriented website, USPokerSites.com, wrote that Rich Kalm, the executive director of the Michigan Gaming Control Board, told the Gambling Compliance, a firm that analyzes the gambling industry, that participating in fantasy sports in Michigan for money is illegal.

But a spokeswoman for the Michigan Gaming Control Board appeared to back off from that opinion.

“When Mr. Kalm was interviewed,… he noted the Michigan criminal gambling laws would seem to prohibit ‘daily’ fantasy sports. ... The Michigan criminal gambling laws existed well before daily fantasy sports,” said the Michigan Gaming Control Board’s Mary Kay Bean in an email.

“Our agency has been studying how Michigan’s criminal gambling laws may apply to daily fantasy sports,” she continued. “Michigan criminal gambling law prohibits accepting something of value (e.g., money) in return for the promise of something of value (e.g., a cash prize) based on an uncertain outcome of a game, contest or event except when gambling is authorized and regulated. Examples of authorized and regulated gambling include the Detroit casinos, licensed horse racing tracks and licensed charitable gaming nights. Additionally, the law does not distinguish between whether a game, contest or event is primarily ‘skill’ or ‘chance.’”

Bean referred the question of legality of fantasy sports to the AG’s office.

“Enforcement of the criminal gambling laws rests with the Michigan attorney general’s office so you may wish to consult his staff about the applicability of Michigan criminal gambling law to daily fantasy sports,” Bean said.

The National Indian Gaming Association, a trade group representing tribal gambling operators, didn’t respond to an email seeking comment.

The fantasy sports industry estimates that 56.8 million people played fantasy sports in the U.S. and Canada in 2015, which would suggest around 1.6 million have played in Michigan.