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In a letter to DraftKings and FanDuel, Attorney General Eric Schneiderman says their contests are promoted like lotteries and are games of chance not skill.
FanDuel and DraftKings, two similar organizations that provide sports fans an outlet to place wagers on their favorite players and teams, have been ordered to stop allowing their NY customers to spend money on their fantasy services.
The Gamblers Anonymous contact for NY City, known only as “Chuck”, said his group had “noticed a pick-up in the last six months of people coming in and saying they’re here because of daily fantasy sports”. His argument that the daily fantasy sites are “fleecing” players and the sites are neither “harmless nor victimless” won’t convince many people.
Martha Coakley, a legal adviser to Boston-based DraftKings and a former MA attorney general, said Schneiderman’s legal reasoning was wrong and the company is pursuing its options. That law makes it federally illegal to run a gambling business that operates in violation of state law. “So, I think there are tremendous benefits to us in terms of growing the game”.
ESPN also noted that DraftKings co-founder Paul Liberman said at a conference that a few DraftKings employees made more off of other daily fantasy sites than their salaries at the company.
So what should the good DFS playing citizens of America, once land of the free, do in response to the NY attorney general’s orders?
In an emailed statement, a DraftKings spokesperson called Florida’s approach “reasoned, informed and measured”, while disputing New York’s ruling.
“New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers”. A spokeswoman, Susan Newer, said that was so obvious that the commission never even had to meet to discuss it. We all just sort of knew, she said. The legislation would ensure that daily fantasy was not the same as sports betting, which is illegal in the state of IL, and would officially ban anyone under 18 from playing. Under NY law, “a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence”. “It’s clear now, with million dollar jackpots and the advertising that goes on, that this is straight-out gambling”, Pallone said.
Then on Tuesday, Schneiderman issued a cease-and-desist order to DraftKings and FanDuel “from illegally accepting wagers in NY”.
When prosecutors shut down online poker in 2011, they were invoking the Unlawful Internet Gambling Enforcement Act of 2006, which prohibited gambling websites from taking bets through any major financial institutions on “a game subject to chance”. More than 600,000 people-10% of FanDuel’s users-have played the game from NY.
That slip came with the revelation that DraftKings employee Ethan Haskell accidentally leaked data about player ownership percentages that was equated to insider trading, though many within the maintain the controversy was largely manufactured and the information was already available to players. For the National Football League, the most popular fantasy sport, contestants invest a fixed amount of (imaginary) money, spending from that budget on a quarterback, running backs, receivers and the like; each player comes with his own price tag, set internally by the fantasy-sports businesses.
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DraftKings hired Morgan, Lewis and Bockius and reported spending $10,000 for the quarter, the company said in its lobbying disclosure filing.
