Justice Manuel Mendez, who sided with New York Attorney General Schneiderman today and granted an injunction against DraftKings and FanDuel.
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An appeals court halted the judge’s decision hours later, allowing the startups to continue operating in the state while they await a further ruling. This immediate stay was granted, so we will remain fully operational in NY.
New Yorkers will be able to play daily fantasy sports until next month after a state appeals court granted an emergency request to keep the mega-popular sites open, postponing a lower court ruling that said DraftKings and FanDuel had to cease operations in the Empire State.
A state judge has barred daily fantasy sports sites DraftKings and FanDuel from doing business in NY. He says daily fantasy sports are a form of gambling that’s illegal in NY.
Preliminary injunctions were granted against both FanDuel and DraftKings, and both filed temporary restraining orders against potential action, though the orders were denied. Mendez’s injunction was to be in effect until the lawsuits were resolved, which could take a year or more.
Former NBA commissioner David Stern called the legal probing of daily fantasy sports nonsense during his appearance Thursday at the Sports Business Journal Intercollegiate Athletics Forum in NY.
“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”, Schneiderman said in a statement.
DraftKings said it would appeal the decision.
“The judge asked many questions showing that he had read the papers pretty deeply and thoughtfully”, said Josh Schiller of the firm Boise, Schiller & Flexner.
Lawyers for the operators argued to Judge Mendez that they should be allowed to operate until the matter is settled at trial.
“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.
Back in October, two IL representatives unveiled new legislation to regulate daily fantasy sites.
The strategy seemed to be working. A DraftKings employee won $350,000 on a FanDuel contest, raising suspicions about possible insider trading.
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. The sites had been using a 2006 law, which protects traditional fantasy sports, to get by.
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“Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under NY law”, Schneiderman wrote in a letter.
