Reps for FanDuel did not immediately respond to our request for comment.
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The companies argue their games are based on skill and are therefore lawful. Mendez largely sympathized with a prior cease and desist order against DraftKings and FanDuel issued by the attorney general; DraftKings and FanDuel were both hoping the judge would overturn the order.
“We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of NY law”, said Schneiderman in a statement. He said the decision is “not a final determination of the merits and rights of the parties”.
The attorney general has said that while the games can involve some skill, that doesn’t make them legal, since the outcome ultimately depends on events out of customer control, such as athletes’ injuries, weather or even blown calls.
An employee in the software development department of DraftKings, a daily fantasy sports company, walks past screens displaying the company’s online system stats in Boston. The two sites then sued the attorney general, calling the move to kick them out of the state a “shocking overreach” that was “unwarranted by the facts and unbecoming of a public official”.
“We want to work with you to ensure that fantasy contests are legal, safe for consumers, and continue to provide the great entertainment value that has driven our growth over the past few years”, FanDuel’s counsel for policy and government affairs Cory Fox told assembled lawmakers in Albany.
The two firms shut down operations in Nevada following a similar investigation.
The two companies said they plan to appeal the order. FanDuel said earlier that it gets about 10% of its business from NY residents.
Although the stay is likely for the end of the year, this means that both DraftKings and FanDuel can continue doing business in NY – one of the prime locations for daily fantasy play. Fan Duel and Draft Kings argue that they are not gambling sites because they receive entry fees and not wagers. NY is said to be the world’s largest market for daily fantasy sports with some estimates of over one million customers in the state.
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In an hour-long hearing later, the daily fantasy operators made their case for a stay before state appellate Judge Paul Feinman. A handful of other states have previously said fantasy sports amounts to gambling and isn’t allowed.
