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DraftKings Fights Back|Against Illinois

CHICAGO (CN) - All DraftKings wanted for Christmas was for the Illinois attorney general to leave it alone, so the fantasy sports website sued her on Christmas eve, after receiving her opinion letter asking it to stop doing business in the state.

In a cover letter to DraftKings and its competitor FanDuel, Madigan said she expects the sites to "amend their Terms of Use to include Illinois as an additional state whose residents are not eligible to participate" in their daily fantasy sports contests.

DraftKings sued Madigan's office in Cook County Chancery Court.

FanDuel and Arizona-based website Head2Head also sued Madigan, in Sangamon County, at the state capital, Springfield.

DraftKings says in its lawsuit that it "seeks to prevent Illinois Attorney General Lisa Madigan from banishing the Daily Fantasy Sports contests openly played in this state for nearly a decade before any court has the opportunity to decide the legality of those contests."

New York, Florida, California and Illinois have introduced legislation to add exemptions to their state gambling laws for fantasy sports.

"Fantasy sports have become a national pastime," DraftKings says in its complaint, claiming more than 2 million customers in 44 states, 10 percent of them in Illinois.

It claims that Madigan's letter could "have a ripple effect" across the country.

"This is about Illinois, but it is not just about Illinois," DraftKings says, which makes Madigan's "precipitous action so pernicious and the stakes here so consequential."

DraftKings claims that Madigan "misinterprets Illinois laws by concluding that Illinois residents who play DFS [daily fantasy sports] contests are committing criminal acts and that DFS contest hosts like DraftKings are operating illegally in Illinois."

Au contraire, DraftKings says. Its participants "must use their strategic know-how and ingenuity to select a lineup that will outperform their competitors'" and "control the outcome of the fantasy competition by exercising complete control and skill over the lineups they choose."

It claims that Illinois law "plainly permits games of skill such as DFS."

DraftKings says Illinois law allows "actual contestants" in games of skill to win predetermined prizes.

But Madigan maintains in her letter that the contestants in fantasy sports, "upon whose performance success or failure is based is the athlete or athletes whose 'skill, speed, strength or endurance' determine the outcome," and "not a daily fantasy sports contest participant who pays a fee to build a 'team' and who may win a prize based on the statistical performance of particular athletes."

Madigan says that fantasy sports players "stand in no different stead than persons who wager on the outcome of any sporting event in which they are not participants."

She says the Illinois Criminal Code prohibits "games of chance or skill for money."

Madigan says DraftKings' oft-cited argument that its contests are games of skill doesn't matter because the law "clearly declares that all games of chance or skill, when played for money, are illegal gambling in Illinois, unless excepted."

But DraftKings claim Madigan's letter "violated Illinois' separation of powers by making what amounts to a legislative judgment" and violated its right to due process by "commanding it to shut down before it has even had the opportunity to defend itself."

Madigan's office said its letter speaks for itself.

Though a New York judge granted state Attorney General Eric Schneiderman an injunction against the websites on Dec. 11, he blocked his ruling from taking effect with a temporary stay.

Several days later, a federal judge granted a stay in a class action consumer fraud lawsuit in Illinois that claims DraftKings employees used inside information to win money on games. Multiple motions to transfer precipitated the stay.

DraftKings is represented by Scott Lassar with Sidley Austin in Chicago, who did not return a voicemail seeking comment on the case.

It seeks declaratory judgment that Madigan's letter is an unauthorized action that denied it due process, and that fantasy sports is not a form of gambling.

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