DraftKings, FanDuel Stop Doing Business In New York State

In the middle of their courtroom fight with New York state over the legality of daily fantasy sports [DFS] contests, both DraftKings and FanDuel have agreed to stop doing business with Empire State residents.

This is according to NY state Attorney General Eric Schneiderman, who just announced that the two sites will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter.”

Schneiderman issued that order in Nov. 2015 after his investigation concluded that DFS contests constitute illegal gambling under NY state law.

When it became apparent that the sites intended to fight the order, the state sued them both, alleging violations of state laws that prohibit the promotion of gambling and “repeated or persistent fraudulent conduct.”

Though a judge initially ordered DraftKings and FanDuel to stop doing business in New York, the companies won an emergency stay of that injunction and had continued to operate in the state — which represents a total of around 1 million customers for the companies — pending the outcome of the state’s lawsuit.

“As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it,” continued the AG. “Today’s agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”

In a statement to Consumerist, DraftKings confirmed the news.

“Effective today, as part of a settlement reached with the Attorney General’s office, DraftKings will stop offering paid daily fantasy sports contests in New York State,” reads the statement. “We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.”

In copies of the agreements released today, DraftKings and FanDuel agree to cease doing business in New York state as of today (March 21, 2016), which means anyone that the sites detect as being in the state will be blocked from entering any contest that charges a fee for entry.

New York will be added to each site’s list of states where the local law prevents them from transacting business. That currently includes Arizona, Washington, Iowa, Louisiana, and Montana.

People in New York with current DraftKings and FanDuel accounts can withdraw their money, and the sites are to honor that request within seven days of receiving them.

The agreement gives the New York state legislature — one of several where high-paid DFS lobbyists are pushing for laws to explicitly legalize fantasy sports — until the end of June to decide whether or not to legitimize the contests.

If the state lawmakers haven’t explicitly legalized DFS by July 1, 2016, the lawsuit continues. But if a state appeals court finds that the lower court was right in issuing the injunction against the DFS sites — or that the state was likely to win at trial — the sites will continue to limit access to paid contests to people in New York.