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Georgia lottery officials question legality of fantasy sports companies FanDuel, DraftKings

ATLANTA — Georgia Lottery officials are questioning whether the daily fantasy sports industry can legally operate in the state, according to a letter sent last month to CEOs of DraftKings and FanDuel.

Georgia Lottery General Counsel Joseph Kim said in the Sept. 23 letter that the companies appear to violate the Georgia Constitution, which generally bans gambling except for state lottery-run games.

Kim told The Associated Press on Monday that neither company responded by the Friday deadline given in his letter. He said lottery officials are considering their next step.

Representatives for FanDuel and DraftKings didn’t immediately respond to emails requesting comment. DraftKings says on its website that fantasy sports qualify as a game of skill, which exempts them from an online gambling prohibition by a 2006 federal law.

Kim said in his letter that the federal law doesn’t protect the companies in Georgia, where the definition of a “bet” includes winning or losing something of value — even if a game requires some skill. Only coin-operated machines are exempt from that definition, he said.

“Based on these definitions a person or party that places or facilitates a ‘bet’ or maintains a ‘gambling place’ commits the crimes of gambling, commercial gambling, advertising commercial gambling and communication gambling information,” he wrote.

In reacting to the Georgia Lottery letter, Brent Holloway, a Hall County resident and a full-time fantasy sports writer, said he “would really need to look at Georgia law as far as what is a game of skill and what is a game of chance, and what other laws might play a role.”

The issue could come up in the next Georgia legislative session, said state Sen. Butch Miller, R-Gainesville.

“There is some inquiry regarding the permitting and how (such companies) operate,” he said.

State Rep. Carl Rogers, R-Gainesville, said, “I don’t think, jurisdiction-wise, we have any authority over the Internet as far as gambling … but (lottery officials) might have gotten an opinion from the (state) attorney general.”

The attorney general’s office couldn’t be reached for comment Monday.

Rogers said he can see the Georgia Lottery’s stance in the matter.

“They’re trying to protect their nest egg and rightfully so,” he said.

Several states are examining the fantasy sports companies after it was revealed that employees often played on competing sites, prompting customer fears that they could gain an advantage from insider information.

Nevada regulators have ordered the sites out of that state unless they get a gambling license, and officials in other states are watching discussions there closely.

Players on the sites pay an entry fee to compete for cash prizes in games involving college or professional sports. Participants select players whose real-life performance generates points.