Attorney General Tells Daily Fantasy Sports
to Stop Taking Bets in New York
The New York State attorney general on Tuesday ordered the two biggest daily
fantasy sports companies, DraftKings and FanDuel, to stop accepting bets in
New York, saying that their games constituted illegal gambling under state law,
according to people with knowledge of his investigation.
The cease-and-desist order by the attorney general, Eric T. Schneiderman, is a
major blow to a multibillion-dollar industry that introduced sports betting to
legions of young sports fans and has formed partnerships with many of the nation’s
professional sports teams. Given the New York attorney general’s historic role as
a consumer-protection advocate, legal experts say the action will most likely
reverberate in other states where legislators and investigators are increasingly
questioning whether the industry should operate unfettered by regulations that
govern legalized gambling.
New York Supreme Court judge rules against DraftKings, FanDuel
A New York Supreme Court justice on Friday granted a preliminary injunction to Attorney General
Eric Schneiderman to stop daily fantasy operators DraftKings and FanDuel from doing business in the state.
Justice Manuel Mendez agreed with Schneiderman's contention that the companies are operating
illegal gambling sites based on how New York law defines gambling. Lawyers for DraftKings and FanDuel
argued that their clients could not have violated gambling statutes because they were taking in entry
fees and not wagers. The main support for their contention was a New Jersey case -- an unpublished
decision in Humphrey v. Viacom (2007) -- which Mendez disregarded, saying that what they took
in were in fact bets under New York law.
"New York State penal law does not refer to 'wagering' or 'betting,' rather it states that a person,
'risks something of value,'" Mendez wrote. "The payment of an 'entry fee' as high as $10,600 on one or
more contests daily could certainly be deemed risking 'something of value.'"
An appeal of the ruling by DraftKings and FanDuel will be heard Friday afternoon, according to the
attorney general's office. Unless the judge grants a stay, the sites will be forced to stop accepting play
from New York customers.
DraftKings said Mendez "misapplied the law" when filing its appeal.
"Daily Fantasy Sports contests have been played legally by New Yorkers for the past seven years and
we believe this status quo should be maintained while the litigation plays out," DraftKings said in a statement.
FanDuel also released a statement after Mendez's ruling: "This is only the beginning of the legal process
and, perhaps more importantly, the New York legislature is already moving forward on action to ensure our
game remains legal and is regulated, which we strongly support. The court specifically noted that this was
not a final determination of the issue and that discovery would be needed to fully resolve the legal question,
which we think should be decided in our favor when all of the evidence is in."
The Fantasy Sports Trade Association said fantasy sports are a game of skill and that the court "simply got it wrong."
Illinois AG says daily fantasy sports contests are illegal
In yet another setback for the daily fantasy sports industry, the attorney general of Illinois
on Wednesday ruled that the contests offered by DraftKings Inc. and similar companies are
illegal under that state’s gambling laws.
Attorney General Lisa Madigan said that in light of the decision, she expected Boston-based
DraftKings and its New York rival, FanDuel Inc., to stop accepting entries from players in
Illinois — including the large, sports-loving Chicago market.
Madigan said that Illinois law explicitly forbids most contests for money, rejecting arguments
by daily fantasy companies that their contests are legal because they rely on players’ skill,
“The statutory language is straightforward and unequivocal. It clearly declares that all games
of chance or skill, when played for money, are illegal gambling in Illinois, unless excepted,”
Madigan wrote in her opinion, which was requested by state legislators earlier this month.
“While the contest organizers assert that daily fantasy sports contests are games of skill rather
than games of chance, that argument is immaterial, because [Illinois law] expressly encompasses
DraftKings And FanDuel Lose A Payment Processor
Update: Title changed to reflect that FanDuel does not use Vantiv for payouts,
and offers additional deposit methods besides Vantiv processing.
Daily Fantasy Sports sites like DraftKings and FanDuel have been dealt another major
blow today, but this time it didn’t come from an attorney general or federal court.
Instead, it came from the company that is responsible for processing deposits and
withdraws for the millions of players on both sites.
In a letter obtained by the New York Times, Vantiv, a major payment processor in the
entertainment space, said it would “suspend all processing for payment transactions”
for clients involved in Daily Fantasy Sports, as of February 29th.
The letter to DFS operators references that an “increasing number of state attorneys
general have determined that daily fantasy sports (‘D.F.S.’) constitute illegal gambling”.