Fantasy sports websites DraftKings and FanDuel filed lawsuits on Friday seeking to avert a shutdown ordered by NY state officials, setting up a legal showdown.
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The attorney general and daily fantasy sites such as Boston-based DraftKings and New York-based FanDuel are embroiled in a dispute over whether the multibillion-dollar industry amounts to illegal gambling or, as the sites contend, is a game of skill.
Schneiderman is not backing off. “DraftKings and FanDuel are operating illegal sports betting websites under NY law, causing the same kinds of social and economic harms as other forms of illegal gambling”, a spokesperson for Schneiderman said in a statement.
The court filings by FanDuel and DraftKings say the games are more skill-based than even season-long fantasy sports, which are permissible under state law.
In the lawsuit, DraftKings criticized Schneiderman for acting as “judge, jury and executioner” and accused aides in the Attorney General’s office of threatening business partners and vendors, such as payment processors, “with adverse action if they did not immediately stop performing their contractual obligations to DraftKings in NY”.
Schneiderman’s office defended the ban on Friday, reiterating that Daily Fantasy Sports sites are illegal in NY.
It is not clear if the decision to not air commercials was influenced by the attorney general’s letter.
While Pate said the average player likely won’t be prosecuted the operators could face heavy penalties – especially considering there are two federal criminal investigations ongoing in NY and Florida. “New York state regulators and regulators in a lot of other states weren’t paying attention”. We have operated openly and lawfully in NY for several years.
Several states already ban daily fantasy sites like FanDuel and DraftKings.
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”.
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.
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For instance, one popular blog, RotoGrinders.com, offers tips by “grinders”, professional daily fantasy sports players who spend thousands per day on games. RotoGrinders also has a daily satellite radio show on SiriusXM.
