DraftKings And FanDuel File Lawsuits To Stop NY Ban

Schneiderman on Tuesday demanded that DraftKings and FanDuel stop taking bets in NY on the basis that they are illegal gambling sites.

Both companies filed lawsuits on Friday asking the NY State Supreme Court to overturn the order that they shut down in the state.

“DraftKings will continue to operate in NY while we pursue all legal options available to prevent the NY Attorney General from denying our customers their right to play the games they love”, a company representative said in a statement.

Schneiderman’s order has already disrupted business and the attorney general pressured payment processors to stop providing the companies service unless it suspends its NY operations.

If both companies are shut down in NY, it will be a significant blow to the fantasy sports industry, considering Eilers Research tells Reuters that the state has more daily fantasy sports players than any other US state.

“The game has been played – legally – in NY for years and years, but after the Attorney General realized he could now get himself a few press coverage, he decided a game that has been around for a long, long time is suddenly now not legal”, FanDuel said in a statement.

Jason Green, 35, was in town from Nashville for a daily fantasy sports conference that is being held this weekend.

The companies may have painted big targets on their backs through aggressive advertising at the start of National Football League season that promised large winnings to participants.

However, the two companies are suing Schneiderman, arguing that skill is involved in the setting of lineups on the sites, which they believe should exempt them from classification as gambling games. If it is, in fact, ruled by the State of NY as a game of considerable chance, it could damage the companies deeply.

The multibillion-dollar industry came under fire this month over allegations of “insider trading” after revelations that an employee of DraftKings won $350,000 on rival FanDuel.

While Georgia has yet to make an official announcement about daily fantasy sites, attorney Page Pate said players should be careful.

In NY Friday, the crowd at the “Fantasy for All Rally” showed support for the sports fantasy websites.

As we discussed on WNYC’s “Money Talking” this week, with many states having similar gambling statutes on the books as NY, Schneiderman’s ruling could have far-reaching implications for this burgeoning industry.