Dueling over fantasy sports

An estimated 600,000 New Yorkers play daily fantasy on DraftKings and FanDuel, having put up more than $200 million in entry fees combined in 2015.

The New York attorney general began investigating daily fantasy sports this year amid allegations that employees of the competing companies were using inside information to win games.

Earlier on Friday, Justice Manuel Mendez of the New York Supreme Court granted a request by Attorney General Eric Schneiderman to ban the fantasy sports games in the state. Schneiderman considers the two companies illegal under NY gambling statutes and is fighting to keep them out.

Both sites said they would ultimately prevail in their dispute, which is reflecting debate nationwide about whether playing fantasy sports is betting. But the battle between the companies and NY is far from over.

The court action in NY is being closely watched as an indication of the challenges that DraftKings and FanDuel may face in other states as they set out to persuade lawmakers that daily fantasy sports is unlike gambling because it is a game of skill, not a contest of chance.

In New York, the chairman of a state legislative committee with authority over gambling predicted this week that the state will ultimately legalize and regulate daily fantasy sports, regardless how the court fight turns out. “I have said from the beginning that my job is to enforce the law, and that is what happened today”.

The games, in which contestants assemble teams from across a league and compete over who combines for the best statistics, are both luck and skill, and are gambling. FanDuel did not have an immediate comment on the ruling.

Schneiderman spokesman Damien LaVera, meanwhile, said the attorney general was eager to show appeals judges why they should uphold Mendez’ ruling.

The decision is not a final word on whether daily fantasy sports constitute illegal gambling under the state’s laws and constitution.

A lawyer for Boston-based DraftKings, David Boies, said its business was legal and it believed the “status quo should be maintained while the litigation plays out”.