Tuesday, New York attorney general Eric Schneiderman sent daily fantasy sports operators DraftKings and FanDuel cease-and-desist notices, declaring the businesses as illegal gambling websites in his state.
In the letter, Schneiderman demanded DraftKings and FanDuel stop accepting “wagers” from New York residents and discontinue operations in the state. “Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under New York law,” Schneiderman wrote in the letter, according to ESPN’s David Purdum and Darren Rovell, and ABC News. “It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country,” Mr. Schneiderman said, adding, “Today we have sent a clear message: not in New York, and not on my watch.”
One could argue that once money becomes a factor in any game form, that it has in fact become gambling. During the recent siege of growth in the business, the sites have argued, vehemently, that the Unlawful Internet Gambling Enforcement Act of 2006 isn’t applicable to them since they offer a game that requires “more skill than luck.” Attorney general Schneiderman contends each wager represents a “‘contest of chance’ where winning or losing depends on numerous elements of chance to a ‘material degree.'” He continues by saying that customers of the site are placing bets outside the influence of their own control, specifically on the real-time results of professional athletes.
“Fantasy sports is a game of skill and legal under New York State law,” FanDuel said in a statement. “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.”
Mr. Schneiderman began his investigation of the sites after a DraftKings employee released internal betting data and that same week won $350,000 on the rival site, FanDuel, which is based in New York. DraftKings denied the breach ever took place — but both companies allow employees to place wagers on their rival sites.
Last September, FanDuel released information saying it was signing up 20,000 to 30,000 players per day. Several companies, including Comcast, NBC and Google are amongst FanDuel’s investors. A real head-scratcher, Major League Baseball and the NBA have invested in the company as well.
The ruling is a blow to the multi-million dollar sites, who last month were faced by a ruling from Nevada regulators that said the sites should in fact be considered gambling, not games of skill. Nevada ordered suspension of the sites until they applied and received gaming licenses from the state. Nearly a dozen states are considering some form of fantasy sports legislation, according to Gambling Compliance, an independent service that monitors gambling legislation, the New York Times said recently.