A federal judge has ruled against a former Las Vegas daily fantasy sports company which tried to argue that it can’t be held responsible for a contract with the NHL’s Minnesota Wild since DFS is illegal in that state.
The contract between Emil Interactive Games LLC and the hockey club was for $1.1 million.
In the ruling, U.S. District Judge Wilhelmina Wright, however, did not rule on whether DFS is actually illegal in Minnesota, saying the issue is not relevant to the case.
Wright’s ruling was being watched as the Minnesota Legislature has not made any definitive moves to classify DFS as legal. The state’s attorney general has also not declared DFS illegal in the state.
The suit involves a 2015 contract between Emil Interactive Games and the Wild where the company was to pay the team more than $1.1 million in a sponsorship and advertising for its DraftOps fantasy sports game.
The team says the company never made any payments on the contract and is seeking the $1.1 million plus interest, as well as $50,000 or more in damages. The suit named Emil Interactive’s president, Las Vegas businessman Ronald Doumani, and Full Boat LLC, which it described as manager of Emil Interactive, as defendants.
The company responded in court documents that it is not liable for the contract due to Minnesota’s laws concerning daily fantasy sports. The company argued that since DFS is illegal in the state, any contracts were void.
That filing caused controversy in the DFS industry, which has been waging a costly state-by-state battle to have DFS contests declared legal and games of skill, rather than gambling. The Wild also objected to the filing.
“That’s the most bizarre argument I’ve ever seen,” team attorney Steve Silton told the Las Vegas Review-Journal. “Essentially you’re arguing that you’re participating in a criminal conspiracy.”
The judge ruled that the dispute “pertains to sponsorship and advertising, not gambling.” Wright wrote. “In short a sponsorship agreement—not online (daily fantasy sports)—is at issue here.”
Wright also said the Wild had not provided sufficient evidence that Doumani and Full Boat LLC were responsible for the debt and dismissed the complaints against them, the Review-Journal reported.
Emil Interactive closed its offices in Nevada in 2015 after Nevada Attorney General Paul Laxalt issued an opinion that daily fantasy sports should be licensed by that state.
In another matter, new DFS regulations have gone into effect in Maryland.
The state passed a DFS bill in July that included taxes on DFS winners in the state, but does not require a licensing fee for DFS operators.
“Daily online fantasy sports games have a significant presence in Maryland,” state Comptroller Peter Franchot said in a press statement. “It is entirely appropriate that we enforce basic rules to ensure the games are fair, anti-competitive abuses are declared out of bounds, and appropriate taxes are paid.”
Under the rules, players must be 18 and operators are prohibited from offering games for amateur or college sports. Operators must also identify highly experienced players, ban third-party scripts used by experienced players and limit players to a maximum $1,000 in deposits per month. Operators also won’t be able to extend credit to players and must hold player funds separate from operating funds.
The rules apply to daily fantasy sports and not to the more traditional season-long fantasy sports formats.
