DraftKings, FanDuel Barred from Taking Action from NYers

A state appeals court judge is temporarily allowing daily fantasy sports sites DraftKings and FanDuel to keep operating in NY, blocking a lower court ruling while the issue is fully considered. As the court itself noted, FanDuel is permitted in other states, making NY very much an outlier on the issue, as most states are moving towards sensible regulations – not bans, but the Attorney General decided he knows what is best by denying New Yorkers access to a game they have embraced and shared with friends and family for years.

Mendez sided with New York Attorney General Eric Schneiderman in granting the injunction against the two companies, by far the largest in the DFS industry.

According to ESPN, more than half a million people play daily fantasy sports in NY. Arguments were heard last month on whether the daily sports games were the same thing as illegal games of chance or if they were lawful games involving skill.

“We are disappointed with the court’s decision, and have filed a notice of appeal and an expedited motion to stay the Court’s decision, pending our appeal, in order to preserve the status quo”, DraftKings said in a statement. “We look forward to continuing that conversation”, DraftKings said. “The injunction doesn’t mean it is over for FanDuel, but it certainly bodes very well for the Attorney General”. FanDuel did not have an immediate comment on the ruling.

With the appellate court decision, FanDuel, who had voluntarily left the state when Schneiderman first sent the cease and desist letters in November, announced they would resume accepting entries from New York State residents.

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

Mendez didn’t make a final declaration on whether the sites are illegal gambling operations.

The operators said daily fantasy is a game of skill and not akin to gambling.

For years, the industry has operated in a vacuum left by Congress. The 2006 Unlawful Internet Gambling Enforcement Act banned online gambling, including online poker, but carved out protection for fantasy sports then largely relegated to season-long workplace leagues. The state already has legalized some forms of gambling, including lotteries, betting on horse racing, video slot machines at racetracks and a number of forthcoming casinos.