New York’s attorney general declares daily fantasy sports games illegal
DraftKings, FanDuel contend their games are based on skill and not luck
New York’s attorney general has ordered daily fantasy sports firms DraftKings and FanDuel to cease operations with consumers in the state, claiming their games constitute illegal gambling under New York law – the most significant blow yet in the mounting legal challenge facing what’s become a multibillion-dollar industry.
The cease-and-desist order from the state’s top attorney was first reported on Tuesday by the New York Times, citing sources with knowledge of the investigation.
The order from attorney general Eric Schneiderman comes less than one month after it was revealed that federal prosecutor Preet Bharara – the US attorney for the southern district of New York widely credited with shutting down the online poker industry in 2011 – was investigating whether the business model behind daily fantasy sports is in violation of federal law.
“Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling and misleading New York consumers,” Schneiderman said in a statement. “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.
“Today we have sent a clear message: not in New York and not on my watch.”
Daily fantasy sports players handpick virtual teams corresponding with real-life athletes and compete for points based on the players’ statistics. Paid competitions varying in format and waged each day cost as little as $1 to enter, but advertise prizes that can reach $2m.
Industry-leading firms DraftKings and FanDuel, each privately owned and valued at over $1bn, have long operated beyond government sanctions on sports gambling under the precept that their games involve more skill than luck, not unlike day trading.