DraftKings, FanDuel to cease paid contests in New York as part of agreement
DraftKings and FanDuel will halt paid contests in New York as part of a deal reached Monday between the daily fantasy sites and the state’s attorney general.
New York Attorney General Eric Schneiderman agreed to drop all claims against the daily fantasy sites minus one for false advertising. Schneiderman sought a preliminary injunction against the DraftKings and FanDuel, alleging the sites violated the state's gambling laws. The injunction, however, was stayed pending an appeal.
“As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it,” Schneiderman said in a statement. “Today's agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division.”
Daniel Wallach, a sports and gambling attorney, told USA TODAY Sports the deal is major victory for the daily fantasy sites.
“The most important aspect of this deal for the daily fantasy sites is that they won’t have to worry about a doomsday scenario,” said Wallach, a partner at the firm Becker & Poliakoff. “If the New York attorney general were to win the lawsuit and the sites were found to have conducted illegal gambling, DraftKings and FanDuel could have been on the hook for significant monetary penalties -- potentially in the hundreds of millions, even billions, of dollars -- and they could’ve been put out of business. This deal eliminates that from the equation.”
New York became the ninth state where the daily fantasy sites will not offer paid contests because of state gambling laws, joining Arizona, Hawaii, Iowa, Louisiana, Mississippi, Montana, Nevada and Washington. Texas stands to become No. 10 effective May 1 as FanDuel agreed to cease paid contests there after the state's attorney general ruled daily fantasy violates state law; DraftKings has filed a lawsuit to block Texas from taking action against the site.
In Monday's deal, DraftKings and FanDuel agreed to stop paid offerings in New York until either a proposed bill to a legalize daily fantasy sports winds through the state legislature or the state's appeals court rules on the pending appeal in September. If no law is in place by June 30, the sites must continue to keep its paid games shuttered to New York residents.
The sites can still offer New York-based customers free games.
The sites would be allowed to resume taking bets as soon as daily fantasy legislation becomes law. If a new law isn't enacted, the state's appeals court would rule on the legality of the contests this fall.
“We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years,” DraftKings said in a statement. “We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.”
“New York is a critical state for FanDuel,” FanDuel said in a statement. “FanDuel is headquartered in Manhattan, where we employ more than 170 young smart, passionate fans who are committed to innovating and providing the best fantasy experience possible. We are proud to be one of New York’s largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York.”