A Judge Has Banned DraftKings and FanDuel From Operating in NY

Eric Schneiderman has called the games illegal gambling based on chance, not skill.

DraftKings and FanDuel argue their contests are highly competitive games of skill, not gambling.

The first announcement was made following New York Supreme Court Justice Manuel Mendez’s ruling that he had granted the request for a preliminary injunction banning all daily fantasy activity in New York for the interim period (until a wider court case was ruled on). Together, both startup companies dominated the daily fantasy sports market, but they didn’t seem to get on the radar of prosecutors and lawmakers until this year, when they started to heavily advertise on television near the start of the National Football League season.

NY delivers the biggest contingent of daily fantasy players, accounting for 12.8% of players, followed by California with 9.7% and IL with 6.7%, according to Eilers Research LLC, which tracks the gaming industry. The ruling will also likely lead to a rash of unflattering headlines for the two companies, even though most DFS supporters view Schneiderman as the more appropriate target of any unflattering language.

The whole argument is that Schneiderman is saying that daily fantasy sports platforms like DraftKings and FanDuel – and fantasy sports as a whole – are forms of illegal gambling, while the companies maintain that they are forms of skilled games that require knowledge.

“We believe that the best path forward for the fantasy sports industry is to craft regulatory solutions that will allow the millions of users who love fantasy sports to continue to play”.

But the judge’s ruling today may signal an uphill battle for these billion-dollar upstarts, a battle whose outcome could have an impact beyond New York’s borders. Both sites argue that they are not gambling sites because they receive entry fees from players and not wagers.

“We remain committed to ensuring all fantasy sports are available to New Yorkers, and will work to bring our product back to sports fans around the state through our appeal and working with the Legislature to enact sensible regulations for fantasy sports”, FanDuel said in a statement. This new ruling allows the sites to continue operating until additional judges have a chance to review the ban, Bloomberg reports.

FanDuel called Mendez’s decision “wrong”, assured a swift appeal and predicted that it would “ultimately be successful” in the case.