DFS giants ready to fight New York ban

DFS giants ready to fight New York ban

Wednesday, November 11, 2015 Totally Gaming
Eric Schneiderman said that DFS games are illegal and designed to "fleece sports fans"

The future of the US daily fantasy sports (DFS) sector is in question after DraftKings and FanDuel were ordered to stop accepting "wagers" from New York residents.

Eric Schneiderman, Attorney General of the state which is home to around 10 per cent of the 56 million US DFS players, told the operators to cease operations in New York, saying their games constituted illegal gambling under state law.

While DFS operators have always maintained that they are exempt from the online gambling ban as a “game of skill”, Schneiderman disagrees and has followed Nevada in issuing a state-wide ban.

"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," Schneiderman said. 

"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."

Schneiderman has given the companies five days to reply to the letters and indicate why he shouldn't pursue cease-and-desist orders against them. The Attorney General's office has said it is not looking to get money back from New Yorkers who won on daily fantasy sites.

The sites - worth billions of dollars according to deals signed in the last 12 months - have come under increased scrutiny since it was revealed last month that a midlevel DraftKings employee playing fantasy football beat more than 200,000 other players, winning $350,000 (€325,800) on rival FanDuel, with suggestions that insider trading was taking place. While DraftKings said an investigation found no wrong-doing, news of that episode prompted Schneiderman to ask the companies to turn over information.

New York-based FanDuel insisted in a statement that its games are legal, while DraftKings has called on its players to petition Schneiderman and said it will “vigorously pursue all legal options available”.

DraftKings said: “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 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.”
 

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