Ordered to stop, fantasy sports companies turn to NY court

Schneiderman issued cease-and-desist letters to daily fantasy sports (“DFS”) wagering sites DraftKings and FanDuel, ordering both companies to immediately stop accepting wagers inside NY.

By his count, daily fantasy sports sites have been operating on shaky legal ground in about a dozen states. Furthermore, the company recently opened 40,000 square-foot headquarters in NY so the ruling will come as an extremely harsh blow. And if the early sniping between the two sides is any indication, this could be a nasty, drawn-out dispute. FanDuel and DraftKings sit atop of an industry, Daily Fantasy Sports, that has signed multimillion-dollar deals with professional sports leagues, and claim to pay out tens of millions of dollars per week to winners. DraftKings and FanDuel are projected to lose a combined $35 billion in revenue, as it is no longer permitted to accept money in the state.

But critics, including Schneiderman, have disagreed with that view.

FanDuel also insisted winning requires skill, adding, “We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options”.

Fantasy players are fighting back as well – and we at Sports Media 101 believe they should. “Moreover, the Attorney General’s letter is impeding DraftKings’ ability to continue its relationships with its current investors and partners”. Attorney General Eric Schneiderman alleges that it is not a game of skill, but rather a game of chance.

DraftKings and FanDuel, the embattled companies that dominate the field, are accusing New York’s attorney general of trying “to bully” them and hurt their businesses.

Fantasy sports websites DraftKings and FanDuel filed lawsuits on Friday seeking to avert a shutdown ordered by NY state officials, setting up a legal showdown. “But we think the law is very clear”.

Meanwhile, Jim Baumbach of Newsday noted around 300 people rallied in front of Schneiderman’s Manhattan office Friday morning in support of DFS games.

While supporters have pointed to an exemption Congress carved out for fantasy sports in the 2006 Unlawful Internet Gambling Enforcement Act, that legislation did not override state gambling prohibitions or other federal statutes, including the Illegal Gambling Business Act.