Goodwin Gaming
April 29, 2016

Good Things Happen In Threes: Tennessee Becomes Third State To Enact DFS Law

“Rocky Top you’ll always be
Home sweet home to me
Good ol’ Rocky Top
Rocky Top Tennessee, Rocky Top Tennessee”*

Daily fantasy sports (DFS) operators have good reason to sing Felice and Boudleaux Bryant’s iconic song about the simpler, freer life afforded by the hills of Tennessee—they have been welcomed back to the Volunteer State, this time for good.

Yesterday, Tennessee Governor Bill Haslam signed the Fantasy Sports Act into law. The Act expressly defines fantasy sports contests as games of skill and regulates them. Passage of the Fantasy Sports Act makes Tennessee the third state, following Virginia and Indiana, to pass a law creating a regulatory framework for DFS contests, and the first state to do so after a negative opinion from the attorney general, Herbert Slatery.

Less than a month ago, the future of DFS in Tennessee looked uncertain. On April 5, Attorney General Slatery issued an opinion that fantasy sports contests constitute illegal gambling under Tennessee law. Slatery’s determination was largely based on the fact that Tennessee is an “any chance” jurisdiction, i.e., any game played for consideration in which there is “any degree” of chance will be considered gambling. Tennessee still defines gambling this way, but the Fantasy Sports Act declares DFS contests to be “primarily” based on skill and explicitly excludes them from the state’s definition of gambling.

Beyond declaring DFS contests to be skill-based and legal, the Act also requires DFS operators to be licensed and establishes various consumer protections.   Here is a non-exhaustive list of what the Act does:

  • Provides the secretary of state with rulemaking authority to effectuate the purpose of the Act.
  • Allows the secretary of state to investigate possible violations of the Act and to establish various licensing fees.
  • Establishes a minimum age of 18 for players.
  • Prohibits paid fantasy contests where players use an automatic draft. (Don’t be late to your draft!)
  • Limits player deposits to $2,500 a month and allows players to self-impose deposit limits or exclude themselves from contests.
  • Requires DFS operators to “clearly and conspicuously” identify highly experienced players.
  • Prohibits DFS contests based on amateur sporting events.
  • Requires operators to segregate operating funds from player funds.

* © House of Bryant Publications, 1967 (written by Felice and Boudleaux Bryant)