Today, the NY Attorney General dropped a bomb on daily fantasy sports sites like FanDuel and DraftKings. Sites like them have been categorized as “illegal gambling sites” and have ordered them to cease taking money from the residents of New York state. The official cease-and-desist notices have been delivered.
NY’s attorney general, Eric T. Schneiderman, told the NY Times:
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.
FanDuel is calling this action “state government stifling innovation.”
To say that this is a huge blow for the genre would be an understatement. Other states are certainly looking at this situation and may follow. This whole thing has been almost an overnight sensation, with both companies (and others) raising a ton of cash and spending it on advertising in every medium known to man.
FanDuel told us that their product is a game…and totally legal:
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.
Both companies are asking its userbase to speak up on behalf of the company, a move that we’ve seen from the likes of Uber and Airbnb recently:
We’ve reached out to FanDuel, DraftKings, MLB, NBA and the NFL for comment and will update once we hear back.
Additional reporting by Fitz Tepper.
NBA spokesman Mike Bass provided us with this statement:
We continue to monitor reports concerning daily fantasy sports. We expect the industry to respond appropriately to the issues that have been raised and continue to comply with all applicable laws.
FanDuel has provided us with the following 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, 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.
DraftKings provided us with the following statement:
We are very disappointed that New York Attorney General Eric Schneiderman 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. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.
We continue to see a number of other officials, including Senator Negron in Florida, Representative Zalewski in Illinois and the Federal Trade Commission, take a reasoned, informed and measured approach to the daily fantasy sports business. We hope this trend continues along with due consideration for over 56 million sports fans across the country who enjoy playing fantasy sports. We remain committed to working with all relevant authorities to ensure that our industry operates in a manner that is transparent and fair for all consumers.
New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers.