NY's AG Takes Steps to Shut Down DraftKings, FanDuel

NY's AG Takes Steps to Shut Down DraftKings, FanDuel
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This story originally appeared on Reuters

New York State's top prosecutor on Tuesday filed for a temporary injunction that would shut down daily fantasy sports leaders DraftKings and FanDuel in the state in a latest blow to the fast-growing, multibillion-dollar industry.

Attorney General Eric Schneiderman said in legal documents filed in a Manhattan trial court that the games are illegal gambling, no different from poker or blackjack.

New York has more daily fantasy sports players than any other U.S. state, according to Eilers Research, so being forced to shut down there could cripple the companies.

The move by Schneiderman, which was expected, followed a failed effort by the two fantasy sports companies on Monday to obtain a separate court order that would have headed off Schneiderman's proceeding.

A hearing on the injunction is set for November 25.

Modern fantasy sports started in 1980 and have mushroomed online. Participants typically create teams that span an entire season in professional sports, including American football, baseball, basketball and hockey.

Daily fantasy sports, a turbocharged version of the season-long game, have developed over the past decade. Players draft teams in games played in just one evening or over a weekend.

The order is the latest threat to the daily fantasy sports industry. The two companies have become the subject of congressional inquiries as well as a ban in Nevada after spending hundreds of millions of dollars on television advertising in 2015.

On Nov 13, Schneiderman sent cease and desist letters to DraftKings and FanDuel, demanding that they stop taking money from players in the state. While the letter established Schneiderman's view that daily fantasy sports are illegal gambling, he must obtain a court order to shut the companies down in New York State.

Schneiderman, in the legal papers filed on Tuesday, cited the companies' investor presentations and comments by their chief executives to bolster his argument that they are not games of skill, which are allowed in the state, but games of chance.

For example, Schneiderman pointed to a DraftKings presentation to prospective investors that make comparisons to poker and sports wagering.

FanDuel also hired a former online poker company executive, while DraftKings has negotiated sponsorship deals with other gambling ventures, including the World Series of Poker and the Belmont Stakes, according to Schneiderman.

Schneiderman said in the DraftKings complaint that nearly 90 percent of daily fantasy sports players lost money in 2013 and 2014, citing the company's data.

(Reporting by Suzanne Barlyn, Editing by Michael Erman and Christian Plumb)
 

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