New York Attorney General Tells DraftKings, FanDuel to Stop Taking Bets in State

Alec Nathan@@AlecBNathanFeatured ColumnistNovember 11, 2015

FILE - In this Sept. 9, 2015 file photo, an employee in the software development department of DraftKings, a daily fantasy sports company, walks past screens displaying the company's online system stats in Boston.  Customers of the two biggest daily fantasy sports websites have filed at least four lawsuits against the sites in Oct. 2015, following cheating allegations and a probe into the largely-unregulated multi-billion dollar industry. In court papers, the customers accused the DraftKings and FanDuel sites of cheating, and argued they never would have played had they known employees with insider knowledge were playing on rival sites.  (AP Photo/Stephan Savoia)
Stephan Savoia/Associated Press

Nearly a month after Nevada ruled daily fantasy sports games constituted gambling and were illegal in the state, New York followed suit Tuesday with a declaration from state Attorney General Eric T. Schneiderman.

According to the New York Times' Walt Bogdanich, Joe Drape and Jacqueline Williams, daily fantasy websites DraftKings and FanDuel were ordered "to stop accepting bets from New York residents," as the attorney general said "their games constituted illegal gambling under state law."

On Wednesday, FanDuel CEO Nigel Eccles said he plans to fight the attorney general's decision, per ESPN's Darren Rovell"We are going to use every avenue to stay open," said Eccles.

The legality of daily fantasy sports has come under scrutiny in recent months following an explosion of activity within the industry, and a primary point of contention has revolved around a loophole in the Unlawful Internet Gambling Enforcement Act of 2006. 

Games of skill were exempt from the legislation, and as a result, daily fantasy websites have been clear to operate freely within the confines of the law. However, states like New York and Nevada have challenged the law recently by banning bets and investigating the games as gambling. 

"Fantasy sports is a game of skill and legal under New York state law," FanDuel said in a statement, according to the New York Times. "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."

Similarly, DraftKings spokeswoman Sabrina Macias released a statement, saying, "We’re disappointed he hasn’t taken the time to meet with us or ask any questions about our business model before his opinion," according to the New York Times

Since the ruling from Schneiderman, FanDuel and DraftKings have both tweeted out petitions to preserve their players' rights in New York.

The daily fantasy industry has also been in the crosshairs of the FBI after a DraftKings employee was investigated following allegations of possible insider trading. Drape and Williams reported on Oct. 14 that an employee "admitted to inadvertently releasing data before lineups for the start of the third week of NFL games were locked in."              

The employee in question, Ethan Haskell, won $350,000 on FanDuel that week but was later cleared of wrongdoing, per Drape, after an outside law firm concluded he did not use the lineup information to his advantage. 

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