Following an investigation by the New York Attorney General into a data scandal surrounding DraftKings and FanDuel in October, a court ruling was established Friday afternoon that prohibited daily fantasy sports operators to accept any payments or wagers from residents of the state.
Advertisement
FanDuel agreed to suspend its operations in the state until the outcome of today’s hearing, while DraftKings had defiantly continued to take bets, but must now cease to do so. Their critics argue that they are legal gambling sites DraftKings and FanDual argue that it is just simply fantasy football that fans can play.
That decision, sought by Attorney General Eric Schneiderman, potentially choked off the sites’ largest market and threatened the future of companies that as recently as September boasted valuations of more than $1 billion.
Pretlow said Friday that lawmakers must await further court rulings before determining whether the Legislature could legalize daily fantasy sports by changing the penal code, or whether it would require a state constitutional amendment.
In New York Justice Mendez deemed that people were risking something of value and that is why it was deemed illegal today.
In this photo taken on Tuesday, Nov. 24, 2015, FanDuel advertising covers the post for an NCAA college basketball matchup in the FanDuel Legends Classic consolation game, at the Barclays Center in NY.
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. Friday morning, Manhattan state Supreme Court Justice Manuel Mendez temporarily barred both sites from taking play from one of their biggest customer bases, until “a final determination” of the court dispute.
“The protection of the general public outweighs any potential loss of business”, Mendez wrote in his decision.
Mendez’s decision sent shock waves across the daily fantasy sports landscape.
FanDuel’s statement said there are many issues that weren’t considered by the judge when he made this ruling, and that the court will look at them as the case progresses. Unless the judge grants a stay, the sites will be forced to stop accepting play from NY customers. At a hearing nearly two weeks ago, lawyers for both FanDuel and DraftKings had argued that, based on past case law, its “entry fees” were not the same as “bets” or “wagers”.
The fight in NY comes amid a federal investigation into the industry and scrutiny from state regulators. FanDuel did not have an immediate comment on the ruling.
FanDuel has said it planned to pay out $2 billion in cash prizes this year.
Advertisement
Daniel Wallach, a sports and gaming attorney with the firm of Becker and Poliakoff in Florida, was skeptical that the companies will be allowed to stay in NY in the short-term, noting that it has among the strictest gambling laws in the country.
