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 Daily fantasy sports gaming "is nothing more than a rebranding of
sports betting," New York Attorney General Eric Schneiderman said in
legal documents filed in a Manhattan trial court. "It is plainly
illegal."
In response to the state attorney general's moves, FanDuel stopped
allowing New Yorkers to participate in paid contests as of Tuesday
afternoon.
"We believe that this restriction is temporary and we hope to be
able to offer our paid contests to New Yorkers again very soon,"
FanDuel said.
DraftKings, however, has pledged to continue running its business as
usual in the state.
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 on Monday by the two fantasy sports companies to obtain a
separate court order that would have headed off Schneiderman's
proceeding.
A hearing on the injunction is set for Nov. 25.
 GAME OF SKILL OR CHANCE?
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.
Schneiderman last week 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, argued that
daily fantasy sports contests are not games of skill, which are
allowed in the state, but games of chance, citing the companies'
investor presentations and comments by their chief executives.
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For example, Schneiderman pointed to a DraftKings presentation to
prospective investors that makes comparisons to poker and sports
wagering.
Moreover, the attorney general said the companies had "basic
compliance issues," encouraging their employees to play daily
fantasy sports games on their competitors' platforms.
Schneiderman also 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.
The injunction requested in New York 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.
DraftKings has contacted the sales division of at least one
television network asking for flexibility for their ad commitments
and are asking to shift some money out of the fourth quarter into
the first quarter of next year, according to sources familiar with
the situation, who wished to remain anonymous because the
conversations were confidential.
A spokesman for DraftKings said the company has not specifically
asked to move ads from the fourth to the first quarter.
(Reporting by Suzanne Barlyn and Jessica Toonkel, writing by Michael
Erman; editing by Christian Plumb and G Crosse)
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