DraftKings, FanDuel barred from operating in NY: ruling

Schneiderman, delighted, stated, “We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of NY law”.

Both DraftKings and FanDuel immediately appealed the decision, which was then presented to the New York Appeals Court. That’s what a New York Supreme Justice Judge said today when he granted the New York State Attorney General’s preliminary injunction against DFS operators, a devastating blow to the entire industry and its millions of customers in the Empire State.

FanDuel had already stopped accepting NY bets because of the earlier developments in the case, but DraftKings continued to accept NY players, arguing it was allowed to do so until the judge took action on Schneiderman’s motion.

The attorney general’s office “has established the likelihood of success warranting injunctive relief”, Mendez said in his ruling.

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 back-and-forth rulings show just how much turbulence lies ahead for the two fast-growing startups, each of which is said to be valued at more than $1 billion, putting them in the elite “unicorn” club.

On Nov. 10, the NY attorney general sent cease-and-desist demands to FanDuel and DraftKings.

The companies unsuccessfully argued to Mendez that daily fantasy sports are games of skill, not chance.

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). Yahoo has said it believes it’s offering a “lawful product”.

Schneiderman was content with the ruling, but needless to say, DraftKings and FanDuel were not.

Mendez’s decision sent shock waves across the daily fantasy sports landscape.

Schneiderman has argued the games are illegal gambling operations.

The major argument at the moment, depends on whether or not these daily fantasy contests are seen more as games of skill or chance. 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.