New York Supreme Court Rules Against DraftKings, FanDuel

The 14-page order rendered Friday by state Supreme Court Justice Manuel Mendez also rejected attempts by the companies to block an enforcement action by the state’s attorney general on the grounds that he overstepped his legal authority and criticized their business practices.

Schneiderman is pleased with the decision, which he said is “consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of NY law”. In the short-term, DraftKings and FanDuel lose 7 and 5 percent of their active user bases, respectively, for the tiem being.

“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.

The hearing is part of the commission’s efforts to develop a policy paper on daily fantasy sports for the consideration for MA lawmakers and other elected leaders. But the companies’ arguments in NY may “have manufactured the rope that will hang them in other states”.

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

Schneiderman had argued for an immediate halt to DraftKings’ business in the state, saying that it was clearly illegal and could harm people with gambling problems.

If Haskell was able to use this information to his benefit – and a report suggested that Haskell’s winnings on FanDuel had increased exponentially since joining DraftKings – then it would seem to suggest that the games really are based in skill and Haskell had simply cheated the system. The injunction, requested by Schneiderman, was granted Friday morning.

An industry lawyer said that licensing and authorizing pay-to-play daily fantasy sports could run afoul of federal law, though whether that would be enforced is an open question. The DFS sites had argued that they were collecting entry fees and not taking wagers, which they said does not constitute gambling.

The ruling is expected to be appealed. It’s unknown whether the National Football League will be doing that, because the National Football League told PFT that it has comment on the ruling that makes daily fantasy illegal gambling (at least for now) in NY. UIGEA prohibits “gambling businesses” from accepting electronic payments in connection with a “bet or wager”, but it made an exception to protect traditional season-long fantasy sports, which don’t profit as significantly from entry fees that could be construed as “bets”. It’s created to provide a balance of protections for fantasy sports players in IL. There have been four separate bills introduced in the legislature to legalize and regulate the games.