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FanDuel and DraftKings are getting shut down in New York too

richard lawler
Senior News Editor
Updated ·4 min read
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The New York Times and ESPN are reporting that New York Attorney General Eric Schneiderman has followed his counterpart in Nevada by asking the two biggest daily fantasy sites to stop taking bets in his state. DraftKings and FanDuel have been struggling to escape a controversy that exploded when reports surfaced that employees were regularly playing, and winning, on the competing websites, and now are facing a future of tighter regulation. According to the letter Schneiderman has decided the games constitute illegal gambling under the laws of New York, and should be banned as games of chance. This is particularly complicated for FanDuel, which has its headquarters in New York.

Update: DraftKings said in a statement to Engadget that "We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love." Meanwhile FanDuel says, "The game has been played -- legally -- in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal." You can read both statements -- along with a quote from AG Schniederman -- in full after the break.

DraftKings:

We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.

"We continue to see a number of other officials, including Senator Negron in Florida, Representative Zalewski in Illinois and the Federal Trade Commission, take a reasoned, informed and measured approach to the daily fantasy sports business. We hope this trend continues along with due consideration for over 56 million sports fans across the country who enjoy playing fantasy sports. We remain committed to working with all relevant authorities to ensure that our industry operates in a manner that is transparent and fair for all consumers.

"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.

FanDuel:

Fantasy sports is a game of skill and legal under New York State law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, coworkers and players across the country. The game has been played -- legally -- in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal. We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General's mind.

New York Attorney General Eric Schneiderman:

Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers. Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.

Both sites claim daily fantasy is actually a game of skill, and therefore legal, although there are a number of states that already banned the games. Their version of fantasy football is not regulated in the same fashion as poker or other online games because of a loophole created by the Internet Gambling Bill in 2006, but state-by-state that hole appears to be closing fast and the feds are investigating too. The companies can challenge the AG's order in the courts, and Darren Rovell of ESPN says they have five days to respond.

Update 2: While DraftKings said Schneiderman "did not take any time to understand our business" I've been told that his office met with the company's CEO and general counsel on a number of occasions, including one on October 9th.

[Image credit: Bloomberg via Getty Images]