A NY judge has ruled that daily fantasy sports sites DraftKings and FanDuel must cease operations in the state for now. But now with companies like FanDuel and DraftKings offering to pay out cash prizes of over $2 billion this year, it seems like everyone is wanting a cut of the action.
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Schneidermans office wrote to both companies in November ordering them to cease and desist from illegally accepting wagers in New York State.
A spokesman for Attorney General Pam Bondi said it wouldn’t be appropriate to comment because the office isn’t a party to the lawsuit.
But a few hours later, an appellate court granted the companies an emergency stay of the ruling – meaning they can continue operating in NY while the legal fight continues.
NY is a crucial battleground for the industry, as it constitutes 12 percent of daily fantasy users – the largest user base of any state, according to Eilers Research.
The order allows FanDuel and DraftKings to keep operating in NY through at least next month.
They also launched an unsuccessful request for a temporary restraining order to prevent Schneiderman from issuing the injunction that was granted today.
Fantasy sports companies and their users just lost big in NY.
At the heart of the furor is the companies’ business plan: Customer pay an entry fee and can win cash based on the performance of actual players in games that take place that day or week.
FanDuel said it is confident the fantasy sports sites will eventually prevail in court, and that there is support in the NY state legislature to change the law to explicitly allow fantasy sports in the state.
Mendez added: “The language of Penal Law 225.00 is broadly worded and, as now written, sufficient for finding that DFS involves illegal gambling”.
FanDuel disagreed, saying in its statement: “The Attorney General’s argument for season-long fantasy sports being legal does not hold water – if season-long fantasy is legal, than daily fantasy is legal, and vice-versa”. The court was very concerned about this issue, but found the issue of whether the AG was failing to enforce against seasonal fantasy sports was not yet squarely before the court – but it will be.
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“We have been monitoring the ongoing legal developments closely and in light of the court’s ruling we are working with our merchants to stop processing transactions related to the daily fantasy sports category in New York State”, PayPal said, in a statement. The state already has legalized some forms of gambling, including lotteries, betting on horse racing, video slot machines at racetracks and a number of forthcoming casinos.
