FanDuel And DraftKings Fight Back, File Lawsuits Against NY Attorney General

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After NY’s Attorney General ordered DraftKings and FanDuel to cease and desist all operations in the state, the two companies have responded, filing lawsuits seeking an injunction against the order.

“Today, we have taken decisive legal action to prevent a unilateral, misinformed and legally misguided attempt by the New York Attorney General to act as “judge, jury and executioner” for daily fantasy sports in New York. We are asking the New York Supreme Court to rule that the Attorney General’s cease-and-desist letter is unconstitutional, an abuse of discretion, and simply wrong. We are confident in our legal position and intend to continue to fight to preserve the right of the over 500,000 New York consumers to play the fantasy sports games they love.” – DraftKings

Essentially, both companies believe that Eric T. Schneiderman, NY’s Attorney General, has unrightfully classified daily fantasy sports as gambling by misinterpreting NY’s gambling laws.

Specifically, section 225 of NY Penal Law states that “a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence”.

So is a player winning a daily fantasy sports contest contingent on an event not under their control? That will now be up to the New York Supreme Court to decide.

In addition to filing a lawsuit, FanDuel (which is headquartered in New York City), said this morning saying that new deposits from users in New York will stop today. However, the company said that all contests this week will run as scheduled, and all users in New York will still be able to withdraw their money as usual.

DraftKings so far has made no effort to stop accepting entries or deposits in New York, releasing a statement saying that the company “will continue to operate in New York while we pursue all legal options available to prevent the New York Attorney General from denying our customers their right to play the games they love.”

In a statement released yesterday, Schneiderman reiterated that “DraftKings and FanDuel are operating illegal sports betting websites under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling…Because both companies have refused to follow the law in our state, we will take action to enforce state law.”

As these lawsuits move through the legal system, we’re likely to see both companies try to recruit users to advocate on their behalf. Yesterday, both companies held a protest outside of Schneiderman’s office. Additionally, FanDuel replaced their homepage with a prompt asking users to sign a petition opposing any measure that would ban online fantasy sports.

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