The lawsuits come just two days after Schneiderman and his office declared that daily fantasy sports, a business in which people win cash prizes in fantasy sports tournaments, was gambling and therefor illegal under NY State law. “We intend to pursue this fight to the fullest to ensure that hundreds of thousands of NY fantasy sports fans can continue to play the games they love”.
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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.
Daniel Wallach, a gaming and sports law expert in Florida, feels that Schneiderman’s decision could serve as a risky precedent for the sites under the Illegal Gambling Business Act – a law that makes it a federal crime to violate state gambling laws.
Fantasy sites have partnership agreements with major sports leagues in the USA – including Major League Baseball (MLB), NFL, and World Wrestling Entertainment – as well as individual teams in the NFL, MLB, National Hockey Association (NHL), and National Basketball Association (NBA).
Market leaders FanDuel and DraftKings have continued to take money from New Yorkers despite receiving cease and desist letters from Schneiderman.
“Daily fantasy sports is neither victimless nor harmless”, Schneiderman said.
But the companies are fighting back hard.
Schneiderman, a Democrat, first launched a probe into the companies last month after questions were raised about their employees wagering on their rival company’s site. Looks like DraftKings has and you can bet FanDuel aren’t far behind.
FanDuel also released a statement Friday saying, “As we said, this week was only the beginning of the legal process”.
Fantasy football companies DraftKings and FanDuel have launched a fightback against attempts by the NY attorney who wants to have the companies banned.
Essentially, both companies believe that Eric T. Schneiderman, NY’s Attorney General, has unrightfully classified daily fantasy sports as gambling by misinterpreting NY’s gambling laws.
In a statement, the attorney general’s spokesman said the law was clear.
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DraftKings and FanDuel are valued at more than $1 billion each, according to Bloomberg, “and have drawn investors from across the sports, media and venture capital industries”.
