The attorney general for the state of New York has told the two major daily fantasy sports companies, DraftKings and FanDuel, that they can no longer accept contest entries from New York residents because their sports fantasy draft games constituted illegal gambling under state law.
New York attorney general Eric T. Schneiderman issued the cease-and-desist order to the two companies Tuesday afternoon. The decision is another huge hit to the young and rapidly growing multibillion-dollar DFS industry that has legions of young sports fans and has resulted in a number of partnerships with well-known professional sports teams.
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Given that Nevada has already banned daily fantasy sports (to unregistered firms) and the New York attorney general’s long-standing role as a consumer-protection advocate, it seems likely that other states will follow suit in the not-too-distant future.
Statement from New York AG
Schneiderman made his opinion of DFS very clear in his statement to the media: “Daily fantasy sports is neither victimless nor harmless, and 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.”
He continued to note in dramatic fashion: “Today we have sent a clear message: not in New York, and not on my watch.”
More on New York banning daily fantasy sports
The order immediately bans FanDuel and DraftKings from accepting entries from players in New York. Legal experts note that both companies will have a chance to challenge the AG’s decision in court.
Daily fantasy sports companies argue that their contests are not gambling but games of skill. The popularity of DFS has surged over the last few quarters, leading both FanDuel and DraftKings to have current valuations of over $1 billion.
Statements from Draft Kings and Fan Duel
After the New York AG’s press conference on Tuesday, Sabrina Macias, a spokeswoman for DraftKings, commented: “We’re disappointed he hasn’t taken the time to meet with us or ask any questions about our business model before his opinion.” She also noted the firm has more than 500,000 users in New York State
FanDuel noted in a statement: “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, co-workers and players across the country.”