The companies claim they are games of skill rather than gambling operations.
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Last month, Schneiderman sent Boston-based DraftKings and New York-based FanDuel cease-and-desist letters after it was revealed in October that a DraftKings employee won $350,000 in a fantasy football contest hosted by FanDuel, raising questions about insider training.
Schneiderman is pleased with the decision, which he said is “consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of NY law”. He says their daily fantasy sports games constitute illegal gaming.
But “the protection of the general public outweighs any potential loss of business” while the case plays out, he wrote, adding that “the payment of an “entry fee” as high as $10,600 on one or more contests daily could certainly be deemed risking ‘something of value”‘ – part of the legal definition of gambling in NY.
New Yorkers will be able to play daily fantasy sports until next month after a state appeals court granted an emergency request to keep the mega-popular sites open, postponing a lower court ruling that said DraftKings and FanDuel had to cease operations in the Empire State.
While this is not the end of the lawsuit between the daily fantasy sports operators and NY, the signs are ominous for the sites; the court would be unlikely to grant the injunction without strongly favoring the position of the attorney general.
But DraftKings and FanDuel quickly appealed.
Pretlow said Friday that lawmakers must await further court rulings before determining whether the Legislature could legalize daily fantasy sports by changing the penal code, or whether it would require a state constitutional amendment.
A handful of other states have previously said fantasy sports amounts to gambling and isn’t allowed. But in his decision, the judge says that Schneiderman has a better chance of winning than the fantasy sites do. Yahoo has said it believes it is offering a “lawful product”. While Collins had not yet reviewed Mendez’s order when speaking to WBFO, he criticized New York State for “hypocrisy” in going after sites such as DraftKings and FanDuel, all while the state itself is in the business of games of chance.
DraftKings also partnered with Major League Baseball to advertise in ballparks while FanDuel signed partnerships with several NFL teams.
FanDuel said the action was “only the beginning of the legal process” and that it expects to prevail. But the level of support for these bills is unclear and lawyers said the state’s attorney general could challenge any such laws as being unconstitutional.
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Local fans of online daily fantasy sports websites are on the sidelines, following a State Supreme Court judge’s ruling to block such sites from doing business within New York State.
