DraftKings, the high profile operator of Daily Sports Fantasy games, will exit the state of Hawaii, it was announced this week. This follows cease and desist orders made by Honolulu prosecuting attorney Keith Kaneshiro which were sent to DraftKings, as well as its rival FanDuel. Kaneshiro’s orders were based on an opinion issued by Hawaii Attorney General Doug Chin that DFS constitutes illegal gambling. The prosecuting attorney said that by accepting and profiting from bets, the operators were essentially promoting gambling. This constituted a Class C felony in Hawaii, and could be punishable with a $10,000 fine and up to 5 years in prison.
Speaking on behalf of DraftKings, the attorney David Boies confirmed that the company would stop accepting bets from Hawaiians, but he also stressed that the group fiercely disagrees with AG Chin’s opinion that DFS constitutes gambling.
“We are hopeful our constructive engagement with Hawaii legislators will promptly address the issue so that our loyal fans can continue to enjoy the games they love without anyone questioning the legality of their conduct,” said the attorney. “In the meantime, we will voluntarily pause operations in the state but hope to resume soon.”
Rival FanDuel were also handed cease and desist orders but had not commented as of this morning.
Industry analysts believe that DraftKings quickly agreed to leave the Hawaiian market since it makes up a minuscule proportion of its total revenue intake. On the other hand, it would take much more to get the group to buckle in New York, as this is one market it cannot afford to lose. Earlier last month, DraftKings won the right to continue operating in New York until its court battle with the AG, Eric Schneiderman is resolved. The complaint against DraftKings was brought by the AG in November last year and will be heard in May. An amended complaint was received against DraftKings in December, demanding that the DFS operator and FanDuel refund all money lost by local players, as well as penalties of thousands of dollars for each violation of state gambling laws.
Hawaii’s gambling laws (code section 712-1220 et seq.) are considered strict and prohibit casinos of any kind. The state is only one of a handful in the US which doesn’t permit the sale of lottery tickets, while gambling aboard ships and the possession of gambling devices such as slot machines is also illegal.
