Jason Robins, the CEO of daily fantasy sports operator DraftKings, acknowledged in May that some of his company's contests do not comply with a federal law, according to the minutes of a trade association committee call obtained and verified by ESPN.
Late Thursday, Robins questioned the accuracy of the minutes and vehemently denied to ESPN that he ever said DraftKings violated federal guidelines.
A source close to the Fantasy Sports Trade Association told ESPN that there were inaccuracies in portions of the minutes and that while Robins said "some sports are not as clearly defined as others," he never stated that DraftKings was in violation of federal law.
On May 19, in an hourlong call with members of the FSTA compliance committee, Robins purportedly said that offering daily fantasy sports on events such as a NASCAR race or a golf tournament does not comply with the letter of the Unlawful Internet Gambling Enforcement Act of 2006, according to the minutes.
During daily fantasy's meteoric growth over the past couple of years, operators have pointed consistently to UIGEA in regard to their legality. But around the same time as the compliance committee call, DraftKings stripped all references to UIGEA from the "Why It's Legal" page on its website, as first reported by industry news site LegalSportsReport.com.
"Jason acknowledged that Golf and NASCAR do not comply with the letter of the UIGEA, but argued that UIGEA was written when daily fantasy didn't exist," the minutes said. "In his view, if it were written today with daily fantasy sports in the mix, it wouldn't exclude specific sports like golf or NASCAR. The presence of a large field, in his view, is similar to having multiple events. He also pointed out that UIGEA is an enforcement statute -- not the 'governing law.' He indicated that state law supersedes UIGEA. From his perspective, the only relevant question is whether you are in violation of state law."
Six months after that meeting, with New York Attorney General Eric Schneiderman trying to shut down both DraftKings and top competitor FanDuel from operating in the Empire State, attorneys for DraftKings have stated in multiple legal filings that the company "operates with careful attention" to the UIGEA.
Asked about the accuracy of the transcript, Robins told ESPN on Thursday night, "The minutes were inaccurate, and in a follow-up meeting with the full board, the first thing I said was just that -- the minutes were inaccurate and I did not say that. What I did say is that the law is more complex and that state law would supersede UIGEA. I never said we were in violation, and was clear about that as soon as I saw the minutes."
Added a company spokesperson in a statement: "The purported FSTA board minutes are not a verbatim transcript, but rather the interpretation of a lengthy meeting by one non-lawyer reflecting what another non-lawyer said about a complex law. Jason firmly believes that all of DraftKings' games are 'games of skill' that comply with all applicable State and Federal law and therefore do not violate UIGEA."
The Wall Street Journal reported in October that a Florida grand jury had subpoenaed the FSTA to produce copies of its board-meeting minutes. FSTA president Paul Charchian declined comment. Nigel Eccles, CEO of FanDuel, is listed as the chairman of the FSTA compliance committee. Eccles could not be reached for comment.
Eccles is quoted in a class-action suit filed recently in New York as saying he is uncomfortable with the legality of offering NASCAR and golf tournaments since "a reasonable person would consider a golf tournament to be a single event, not multiple events."
According to the minutes, the meeting concluded "with the understanding that Jason would be proposing a change to the Charter that would remove the requirement that operators offer games that are consistent with the UIGEA carveout. Further discussion of what would happen if the charter change was not adopted was tabled."
As of Thursday morning, the FSTA paid-entry-contest operator charter maintained that compliance with UIGEA is required.
UIGEA aims to prohibit payment processors from accepting illegal online gambling transactions. The statute contains language that excludes fantasy sports that meet certain criteria from being considered a "bet or wager," therefore allowing payment transactions to be processed. Among the criteria that must be met by fantasy sports events to comply with UIGEA, the winning outcome of a fantasy contest may not be "based solely on any single performance of an individual athlete in any single real-world or single event."
While the more popular daily fantasy tournaments such as football, basketball and baseball involve multiple games, NASCAR and golf daily fantasy tournaments are based on a single event. Both DraftKings and FanDuel are headed to New York Supreme Court next week in an attempt to fight off Schneiderman's cease-and-desist demand and request for a preliminary injunction. Schneiderman has said daily fantasy sports violate the state's gambling laws.
ESPN.com's David Purdum contributed to this report.