Former AG Maura Healey Counsels DraftKings In NY Legal Dispute

Healey said her goal was a “robust legal and regulatory framework” that focused on protecting consumers and guarding against fraud. Robert Menendez (D-NJ) called for the Federal Trade Commission to investigate the relationship between the daily fantasy industry and sports leagues.

A day after being given a cease-and-desist letter by New York’s attorney general, FanDuel says it will keep the fantasy sports site operating in the state. In the past year alone, both operators have made multi-million dollar advertising deals with organizations in New York, featured at Madison Square Garden’s, the New York Jets’, and the New York Knicks’ stadiums.

Our review concludes that DraftKings’ operations constitute illegal gambling under ny law, according to which, “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”.

“We’ve got to be one step ahead of everything because we will be regulated as an industry”, Silver says. “If we’re not staying on top of it, we won’t exist a year from now”.

But barring those or similar scenarios, it’s hard to appreciate how a DFS operator could remain in NY following this request.

The ruling doesn’t shut down the sites and it does not have an immediate impact outside of NY, but it will raise a lot of red flags for participants who are pouring billions of dollars into FanDuel and DraftKing. During the recent siege of growth in the business, the sites have argued, vehemently, that the Unlawful Internet Gambling Enforcement Act of 2006 isn’t applicable to them since they offer a game that requires “more skill than luck”. “We… will examine and vigorously pursue all legal options”. Legal sports lottery wagering is worth about $500 million.

Industry executives say that daily fantasy ad spending will drop significantly once football is over this winter, because while there are daily fantasy offerings for other sports, daily fantasy is really about football, football, football.

Further, the Penal Law criminalizes contests that depend “in a material degree upon an element of chance” even if contestants need skill to play. Cash prizes grow with the player pool.

Healey said she did not want to comment on the characterization of the daily fantasy sports companies by her NY counterpart, a fellow Democrat.

The services allow users to draft virtual teams of actual professional players and win money based on their performance. “It’s all about doing your research”. The legal question is still the giant one… “It makes intuitive sense they’d be concerned”.

ABS Partners Real Estate’s Jay Caseley, who represented the landlord in the DraftKings lease, said the startup is a “tenant in good standing” despite being benched by the state. New England Patriots owner Robert Kraft and Dallas Cowboys owner Jerry Jones are both big investors in DraftKings. The company believes DraftKings operates fairly.

Jones calls this eagerness to align with pay-for-play fantasy sports a “fundamental shift” in leagues’ stance on gambling, and the relationships have enabled massive marketing campaigns. Half that spending went to National Football League broadcasts.

For his part, Schneiderman said in a statement that daily fantasy sports is “neither victimless nor harmless”. In July, the company announced a new round of funding worth $300 million. Both figures were records.

Eccles said he would welcome “sensible regulation” in the form of consumer protections. But as the NY Times points out, these types of sites have pushed the limits of that exemption by branching out to cover sports that rely more on chance than skill.

“I don’t see it crippling the industry. There will be too many barriers to entry”.