In NY, the criteria for determining what is considered skill-based is much more rigorous than in other states, and the NY Attorney Genreral’s office has determined that in their state, DFS play falls under their determination as “gambling”.
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Schneiderman’s cease-and-desist letter is a big deal because it not only threatens the two companies’ businesses in one of their more lucrative territories, but also could set the tone for regulators’ approaches in other states.
Schneiderman had given the companies five days to convince his office to not pursue legal action after sending the letters, which likened the games to the lottery and said they were in violation of state gambling laws.
According to DraftKings, PayPal and Vantiv were contacted by Schneiderman and threatened with legal action if they continue to service the fantasy gaming site.
Schneiderman issued the strongest-yet rebuke of the daily fantasy sports industry Tuesday, formally referring to the contests as illegal gambling rings. The state has carved out a few exceptions including horse racing and the state lottery, but each change required amending the constitution. That years-long process requires approval by two successive legislatures, followed by a public vote, he said. Nigel Eccles said his site is legal and that the court order is extreme.
Unlike in the United States, where sports betting is legal only in a handful of states, daily fantasy sports will have to compete with a well-established, lucrative sports betting industry internationally, industry watchers note. “There’s a lot of misinformation out there and hopefully we’ve shown that people should be allowed to keep playing”.
Fantasy sports is a booming business that remains largely unregulated.
“If you’re like us and you believe that daily fantasy sports is fun, entertaining, and a game of skill … tell your legislators directly that you would oppose any such measure”, the DraftKings email read. Normally, the data is not released until after certain games are played.
The investigations into the practices began in earnest earlier this year, when in October the FBI became aware of an employee from DraftKings won a $350,000 pot at FanDuel, prompting allegations of insider information. Fantasy Sports for All has put together an online petition to combat Schneiderman’s efforts to shut down DFS in NY State.
“The Attorney General’s job is to enforce NY State law, and the law here is clear”. FanDuel and DraftKings sit atop of an industry, Daily Fantasy Sports, that has signed multimillion-dollar deals with professional sports leagues, and claim to pay out tens of millions of dollars per week to winners.
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Disclosure: Comcast and NBC are investors in FanDuel.
