War over daily fantasy sports escalates

“Mr. Boies, Mr. Schiller and their team look forward to representing DraftKings and joining their top-flight legal team, which will work with the regulatory agencies, including the NY attorney general, to resolve this dispute”, a DraftKings spokesman said.

The companies have continued to offer games to New Yorkers, who, according to the Globe, make up the largest pool of active, paying players in North America, as much as 13 percent of the total players in the United States.

Daily fantasy sports sites FanDuel and DraftKings have sued NY State Attorney General Eric Schneiderman after he sought to ban them for illegal sports gambling.

The investigations into the practices began in earnest earlier this year, when in October the FBI became aware of an employee from DraftKings won a $350,000 pot at FanDuel, prompting allegations of insider information.

Boston-based DraftKings claimed the attorney general lacked legal authority and had engaged in a “shocking overreach”.

Protesters at a rally in front of Schneiderman’s Manhattan office Friday said they feared New York’s action could have a domino effect.

NY is not the only state with a microscope on FanDuel and DraftKings. Additionally, FanDuel replaced their homepage with a prompt asking users to sign a petition opposing any measure that would ban online fantasy sports. The sites also asked to continue operating in NY. DraftKings, in a NY Supreme Court filing seeking to rule the cease-and-desist order is unconstitutional, said Schneiderman’s office contacted Vantiv, PayPal and other third parties in an attempt to immediately stop processing payments from the site’s NY customers. A report from Eilers Research indicates that NY has the highest participation in daily fantasy in any state.

New York’s attorney general is the latest to challenge daily fantasy, declaring the contests amount to illegal sports betting in his state. He says he played a free trial on one of the sites and he thinks they’re legal, but also in need of a few oversight.

Both companies have said they support certain regulations and consumer protections but argue that legislatures should be the driving force.

Season-long fantasy sports games were given an exemption in the Unlawful Internet Gambling Enforcement Act of 2006 – well before daily fantasy sports existed.