Is it the beginning of the end for daily fantasy?
Bad news for people who play Daily Fantasy on FanDuel or DraftKings in New York today. State Attorney General Eric Schneiderman has declared the two sites are a form of illegal gambling and has informed them to cease wagers from users in New York effective immediately.
The two DFS sites have come under fire recently, with some of their employees in the thick of controversy surrounding the amount of money they made and if they gained an unfair advantage based on insider information. Las Vegas also considered the two sites a form of gambling and said they needed a license to operate in the state, which made the two sites cease operations in state shortly after.
Both FanDuel and DraftKings have been operating under the Unlawful Internet Gambling Enforcement Act of 2006, which argues legality based on the fact that playing requires skill.
However, the New York Attorney General said the sites are contests of chance and winning/losing is based on different elements that are out of their control.
New York has the highest number of participants of any state currently, so today’s ruling is a big blow to the billion dollar companies which have backing from FOX, NBC, Comcast and Time Warner as investment partners. It’ll be interesting to see how many other states follow suit and how this affects the companies moving forward.
BREAKING: NY Attorney General says daily fantasy is gambling & illegal, says DraftKings & FanDuel must cease operating & taking action in NY
— Darren Rovell (@darrenrovell) November 10, 2015
UPDATE: DraftKings and FanDuel have responded to the ruling by the New York Attorney General and you can expect the two companies to pursue action in court. You can read excerpts from both of their statements below.
“Fantasy sports is a game of skill and legal under New York State law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, coworkers and players across the country. The game has been played — legally — in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal. We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General’s mind.” – FanDuel
“We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love. New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers. – DraftKings
OS REWIND: FanDuel & DraftKings Are Facing Class Action Lawsuit for Insider Trading
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