N.Y. Attorney General: DraftKings, FanDuel Must Cease Operations

Courtesy of Playbook.draftkings.com
Draftkings

"Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers."

New York Atty. Gen. Eric Schneiderman dealt a blow to daily fantasy sports sites on Tuesday when he classified DraftKings and FanDuel as illegal gambling and ordered they cease operating in the state. 

"Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers," Schneiderman said in a statement. "Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.”

This story was first reported by ESPN's David Purdum and Darren Rovell.

DraftKings and FanDuel are the two largest entities in the online fantasy world. 

FanDuel hit right back, calling Schneiderman's move nothing more than an attempt for the "politician" to grab headlines. 

"The game has been played — legally — in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal," according to a statement from FanDuel. "We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General's mind."

DraftKings faulted Schneiderman for taking "hasty action" and taking "any time to understand our business or why daily fantasy sports are clearly a game of skill." The company praised officials from other states for taking a "reasoned, informed and measured approach to the daily fantasy sports business"

"New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers," DraftKings' statement continued.

Fox Networks Group led a $300 million venture-funding round for DraftKings Inc., the Wall Street Journal reported in July. 

In October, the Nevada Gaming Control Board banned daily fantasy sports calling them "illegal without the appropriate license."

"All unlicensed activities must cease and desist from the date of this Notice until such time as either the Nevada Revised Statutes are changed or until such entities file for and obtain the requisite licenses to engage in said activity," according to the gaming control board.

DraftKings' full statement is below.

We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.

We continue to see a number of other officials, including Senator Negron in Florida, Representative Zalewski in Illinois and the Federal Trade Commission, take a reasoned, informed and measured approach to the daily fantasy sports business. We hope this trend continues along with due consideration for over 56 million sports fans across the country who enjoy playing fantasy sports. We remain committed to working with all relevant authorities to ensure that our industry operates in a manner that is transparent and fair for all consumers. 

New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers.

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