The companies responded with separate lawsuits filed in NY Supreme Court, arguing their games are skill-based and therefore are exempt from anti-gambling laws.
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“The key factor establishing a game of skill is not the presence of skill, but the absence of a material element of chance”, Schneiderman’s office said in the lawsuit.
Of course daily fantasy sports constitutes illegal betting.
Schneiderman issued an administrative cease-and-desist order on November 11 following an investigation by his office concluding the two websites are illegal gambling operations.
The move by Schneiderman, which was expected, followed a failed effort on Monday by the DraftKings and FanDuel to obtain a separate court order that would have headed off Schneiderman’s proceeding. But that figure jumped to $21 million in the first 10 months of this year, an increase of more than 2,000 percent.
The trouble with the continued pummeling of DraftKings and FanDuel is simple: It perpetuates the image of sports betting as a pariah activity in a nation that gambles on absolutely everything – and is run by Wall Street, the biggest casino in the world. “He has unleashed an irresponsible, irrational, and illegal campaign to destroy a legitimate industry, intending to deprive hundreds of thousands of New Yorkers of the use and enjoyment of these services”.
“We maintain, unequivocally, that FanDuel has always complied with state and federal law”, the company said in a statement.
“We look forward to the court vindicating our position next week”, it said.
Schneiderman went on to reject the two companies’ argument that their games involve skill, not chance. Schneiderman says chance “plays a significant role’ in DFS results, be it via “player injury, a slump, a rained out game, even a ball taking a bad hop”.
The CEO of DraftKings previously spoke openly about DraftKings as a gambling company. FanDuel told an early investor that its target market is the male sports fan who “cannot gamble online legally”.
Arizona, Florida, Iowa, Louisiana, Montana, Nevada, and Washington already bar its residents from participating in daily fantasy sports games that involve cash prizes. They also have recently prohibited employees from playing on rival sites. Schneiderman contrasts DraftKings’ claims of easy winnings with the site’s own stats that show 89.3% of DFS players had a negative return on their investment between 2013 and 2014.
– Despite the sites’ rejection of the label “gambling”, the sites employ an “overt strategy of recruiting gamblers”.
According to the order, traditional fantasy sports conduct competitive drafts and play for “bragging rights or side waivers”, and the hosting websites receive most of their revenue from pay-to-play fees and advertising, rather than profits from the wagers. DraftKings entered sponsorships with gambling ventures like the World Series of Poker and the Belmont Stakes.
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DraftKings’ heavy sponsoring of the World Series of Poker, which the DFS platform discontinued in light of legal challenges, is proof in Oliver’s mind that fantasy contests and gambling are intertwined.
