After a review of appropriate state statutes, case law, and operations, Attorney General Peter F. Kilmartin has found that daily fantasy sports are currently legal under Rhode Island law. Kilmartin sent his finding in a letter to Governor Gina Raimondo, Senate President M. Teresa Paiva Weed, and Speaker Nicholas Mattiello.
Kilmartin also strongly advised the Legislature to at a minimum establish regulations to protect Rhode Island players.
"There has been much discussion nationwide about the legality of daily fantasy sports. What has been made very clear is that state-specific laws determine the legality of these operations; what is found to be legal in one state may be found to be illegal in another state. After a very thorough review of how these sites operate and an analysis of our statutes and relevant case law, I am confident that daily fantasy sports sites are currently legal in Rhode Island," said Attorney General Kilmartin.
There is no comprehensive definition of "gambling" under Rhode Island law. Rhode Island laws specifically prohibit "games of chance," as well as lotteries, except those operated by the State. Lotteries comprise three elements: consideration, prize, and chance. The analysis by the Attorney General found that while daily fantasy sports have the elements of consideration and prize, whether they constitute a "lottery" under Rhode Island law relies upon an analysis of the element of chance.
Recognizing that although the outcome of some games are purely based upon chance, and others entirely upon skill, it is clear that daily fantasy sports, like most games, are a mixture of chance and skill. The Supreme Court of Rhode Island has adopted the "dominant factor" test to determine if chance exists in a lottery game.
Under this doctrine, a scheme is a lottery "when an element of chance dominates the distribution of prizes, even though such a distribution is affected to some degree by the exercise of skill or judgment." This is an especially high burden, more than the "substantial" chance that the New York Supreme Court found in December 2015 when analyzing the New York Attorney General's challenge to daily fantasy sports.
Applying the "dominant factor," the Attorney General determined that daily fantasy sports do not constitute a "game of chance."
"Despite daily fantasy sports being legal, I believe there should be strict regulations imposed on the operation of these sites to address the issues we have experienced with gambling in Rhode Island, including infiltration of the criminal element, youth participation, and addiction issues," added Kilmartin.
In the letter, Kilmartin stressed the need that any regulatory scheme reduce or eliminate the risk of economic harm to vulnerable players, promote the games' transparency, and potentially generate revenue for the State.
Analysis and review was conducted by attorneys from both the civil and criminal divisions of the Office.