Almost a month after Nevada declared that daily fantasy sports sites like DraftKings and FanDuel are unlicensed gambling operations and barred them from operating in the state, New York appears to have come to a similar conclusion.
As first reported by ESPN, NY state attorney general Eric Schneiderman — who began looking into these sites after news reports raised serious concerns about their business practices — has sent letters to both DraftKings and FanDuel telling them to cease and desist selling their fantasy sports betting services in the state.
That means that if you live in New York City — home to more than a few former Wall Streeters-turned-fantasy sports bigshots — or anywhere else in the state, you wouldn’t be allowed to enter any tournaments on these sites. It’s possible the sites could convince a court to stay the AG’s decision pending a legal review.
Schneiderman’s office reviewed the business operations of these companies and concluded that they “constitute illegal gambling under New York law.”
As we’ve explained before, fantasy sports betting was exempted from a 2006 law barring financial institutions from transferring money to these sites. The argument at the time was that fantasy sports are games of skill, rather than gambling.
But critics of the industry — which recently received huge investments from venture capitalists, and have signed high-profile marketing deals with sports leagues and major broadcast networks — say that fantasy sports are just as much a game of chance as poker, or betting at the racetrack.
Which seems to be the conclusion reached by Schneiderman.
“[U]nlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law,” reads a statement from the AG to ESPN, “causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers.”
Schneiderman dismisses the argument that no one is hurt by fantasy sports sites.
“Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country,” explains the AG. “Today we have sent a clear message: not in New York, and not on my watch.”
In a statement to Consumerist, a rep for DraftKings says the site is “very disappointed” by today’s “hasty” decision from Schneiderman, claiming that the AG “did not take any time to understand our business or why daily fantasy sports are clearly a game of skill.”
DraftKings says it “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.”
Meanwhile, FanDuel accuses Schneiderman of grandstanding.
“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,” reads the FanDuel statement. “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.”