New York Attorney General Eric Schneiderman has ordered DraftKings and FanDuel, the two largest daily fantasy sports companies in the U.S., to stop accepting bets inside New York state.
Schneiderman has sent cease-and-desist letters to the two companies, his office said in a news release issued Wednesday.
If you have watched any NFL football games on TV this season, you no doubt have seen a flood of commercials promoting the chance to win big cash playing daily fantasy sports contests on DraftKings and FanDuel.
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But Schneiderman’s investigators determined that DraftKings and FanDuel were “in violation” of the state law that prohibits illegal gambling.
The order doesn’t affect “traditional, season-long fantasy sports,” Schneiderman’s office said.
In addition, the attorney general’s investigation found that both companies “consistently” use deceptive advertising to lure consumers into an “unregulated,” online gambling operation that, while marketed as a game that “anyone can win,” distributes the “vast majority” of winnings to a “small subset of experienced, highly sophisticated players.”
These winners constitute roughly 1 percent of all players on the two sites, Schneiderman’s office said.
The attorney general’s investigation also revealed that both companies “deliberately target demographics susceptible to problem gambling.”
“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 the news release. “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. Today we have sent a clear message: not in New York, and not on my watch.”
Company reaction
On its website, New York City–based FanDuel, Inc. responded with a statement saying 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, 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,” FanDuel said.
On the website of Boston–based DraftKings, the company includes a tab in its menu at the bottom of the home page that reads “100% legal.”
On that page, the website displays a message that reads “playing on DraftKings is 100% legal in the USA.”
That same page includes a box with the question, “Why is it legal?” The company answers its own question saying, “The legality of daily fantasy sports is the same as that of season long fantasy sports. Federal law and 45 of the 50 U.S. states allow skill-based gaming.”
It also says “Daily fantasy sports is a skill game and is not considered gambling.”
Contact Reinhardt at ereinhardt@cnybj.com
