Following an investigation by Attorney General Eric T. Schneiderman into the legality of daily fantasy betting games, a New York State Supreme Court judge ruled last week that daily fantasy websites DraftKings, Inc. and FanDuel, Inc. are barred from doing business in New York.
Justice Manuel J. Mendez on Friday granted Schneiderman’s preliminary injunction to block either of the competing organizations from accepting entry fees, wagers or bets within the state.
However, an appeal by both fantasy juggernauts on the grounds that they were accepting entry fees rather than wagers was granted late Friday by the court, allowing them to continue accepting wagers from New York players for the time being.
“We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law,” Schneiderman said. “I have said from the beginning that my job is to enforce the law, and that is what happened today.”
In a statement Friday, DraftKings officials said they were “deeply disappointed” in Mendez’s ruling, and encouraged players to reach out to legislators in support of their operations. Officials said the immediate stay of the injunction means “that you can continue to play daily fantasy sports in New York for now.”
“We expect an appellate court to see what we have seen from the outset: that DFS is a game of skill, one that builds community and whose competitive spirit has become central to the lives of millions of people,” the statement read. “Our appeal will make clear that daily fantasy contests require just as much skill as do season-long contests, which the Attorney General recognizes as perfectly legal under state law.”
Schneiderman’s office first launched an investigation into FanDuel and DraftKings on Oct. 6, after allegations that employees of the websites used inside information to gain an advantage in winning fantasy competitions. DraftKings Written Content Manager Ethan Haskell allegedly won $350,000 this fall playing on FanDuel, a rival company, which brought into question the inside information daily fantasy company employees may have.
According to court documents, “The NYAG claims that the ‘entrance fee’ is not returned in the event of a loss and because the statute only requires ‘something of value,’ not requiring that it be classified as a ‘bet or wager’ the ‘entrance fee’ is sufficient to establish gambling,”
A cease and desist letter was delivered to both companies on Nov. 10, and FanDuel filed a complaint arguing that the company functions as a game of skill. Lawyers for both New York-based FanDuel and Boston-based DraftKings have argued that daily fantasy competitions are games of skill. The companies are each valued at more than $1 billion.
