Things are only getting worse for the definitely skill-based daily fantasy industry, as New York Attorney General Eric Schneiderman ordered DraftKings and FanDuel to cease accepting bets from New York residents. In a prepared statement, Schneiderman assailed daily fantasy, saying it constituted illegal gambling, misled customers, and is intended to “fleece sports fans across the country.”
“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. 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.”
Schneiderman’s order comes one month after he first announced an investigation into DraftKings and FanDuel, and ordered them to turn over reams of information. That investigation was triggered by a DraftKings employee with access to inside info had won $350,000 playing at FanDuel.
Both DraftKings and FanDuel blasted Schneiderman’s order. A DraftKings spokesperson said they were disappointed he “took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill,” while FanDuel said Schneiderman 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.”
FanDuel has its offices in New York, but Schneiderman’s order only prevents New York residents from playing daily fantasy. ESPN cites “industry research firm Eilers Research,” which says that New York has more daily fantasy players than any other state. According to DraftKings, the order affects “over half a million” of their customers.
New York becomes the sixth state—and by far the most important one—to ban FanDuel and DraftKings. While the two sites agreed to stop operating the previous five times they were banned from operating in a state, it looks like New York is where the line is going to be drawn in the sand. According to David Purdum, DraftKings is going to fight Schneiderman’s ruling:
This should be fun.
Photo via Getty; Art via Jim Cooke