NY attorney general ordered companies to stop operating in state

In a statement issued by FanDuel said, “Fantasy sports is a game of skill and legal under ny state law”.

SEATTLE — The NY attorney generals decision that daily fantasy sports betting sites FanDuel and DraftKings are illegal gambling operations in his state is a major blow to the companies, but the multibillion-dollar industry could have more legal headaches yet to come.

Schneiderman’s cease and desist letters state the companies have five days to respond and offer their arguments against the state ruling.

As weve pointed out before, and as everyone with a television set or Internet-connected device knows, FanDuel and DraftKings, the daily fantasy giants, blanketed the US market in ads at the beginning of the National Football League season this fall.

DraftKings and FanDuel have both hired former NY prosecutors for advice as scrutiny by regulators and law enforcement agencies intensifies.

The letters say the companies’ customers “are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes”.

Yet the attorney general said only daily games were illegal, not the seasonal leagues that have been popular for decades.

That’s not to say that I believe Daily Fantasy should be illegal.

FanDuel issued a response to Schneiderman’s order online. The attorney general intends to seek a court order to shut down the sites, a person familiar with the situation said.

Nevada recently made a decision to require daily fantasy sports sites to apply for gambling licenses, which would force companies like FanDuel and DraftKings to define themselves as gambling websites.

“Today we have sent a clear message: not in NY, and not on my watch”, he added. This means that, for most punters, the instant-millionaire contests are not skill-based but faith-based-that may be worse in a way than gambling, where at least everyone has the same odds. In NY, gambling is more restricted.

And the latest statement from Healey’s office also reflects the change in language, using the word gambling in reference to what the consumer protection aims are.

Schneiderman “better be ready for a long legal struggle because these guys are going to fight him tooth and nail”, Father Richard McGowan, a priest who’s an adjunct associate professor at Boston College and an expert on gambling, told CBS MoneyWatch.

The FBI and U.S. Department of Justice opened federal investigations last month after it was revealed that a DraftKings employee had divulged classified customer information while winning $350,000 from a FanDuel fantasy National Football League contest, worldwide Business Times previously reported. If the ban does take effect, NY would join Arizona, Iowa, Louisiana, Montana and Washington as states that don’t allow daily fantasy sports. Probably. With so much money being exchanged, it’s hard to see how a regulatory framework could be a bad thing, and it might provide some needed transparency on an industry few people actually understand. Wallach said there’s been over 28 class action lawsuits filed by people who have played daily fantasy because they felt duped by insiders who had an edge on the competition.

“Because of the daily nature of daily fantasy sports, I think there are sufficient questions to allow the attorney general to reach the conclusion that it’s purely a game a chance”, said McLaughlin, now a partner with the Hodgson Russ law firm.