A judge has ordered DraftKings and FanDuel out of New York state, handing New York Attorney General Eric Schneiderman a victory in his battle against daily fantasy sports games.
The two sites had asked New York State Judge Manuel Mendez to block Schneiderman’s efforts to shut down their games for New York players, arguing that it would be unfair hurt to their business while their case is argued in court. But Mendez said they cannot accept bets from New Yorkers until the case is concluded.
“The protection of the general public outweighs any potential loss of business,” Mendez wrote in his decision. He points out that the sites can continue to operate in other states while the case is considered. FanDuel executives said earlier this fall that it gets about 10% of its business from New York residents.
Both companies said they would file emergency appeals seeking to block the order from taking effect.
“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,” said David Boies, attorney for DraftKings.
FanDuel said it is confident not only that the fantasy sports sites will eventually prevail in court, but that there is support in the New York state legislature to change the law to explicitly allow fantasy sports in the state. There have been four separate bills introduced in the legislature to legalize and regulate the games.
Schneiderman is pleased with the decision, which he said is “consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law. I have said from the beginning that my job is to enforce the law, and that is what happened today.”
Last month Schneiderman issued cease-and-desist letters to both sites, arguing that daily fantasy sports games constitute illegal gambling under state law. Both sites filed court actions objecting to Schneiderman’s order, arguing that fantasy sports is a game of skill which is specifically allowed under the federal law that prohibits other forms of online gambling.
FanDuel had already stopped accepting New York bets because of the earlier developments in the case, but DraftKings continued to accept New York players, arguing it was allowed to do so until the judge took action on Schneiderman’s motion. FanDuel did not have an immediate comment on the ruling.
The decision is not a final word on whether daily fantasy sports constitute illegal gambling under the state’s laws and constitution. But in his decision, the judge says that Schneiderman has a better chance of winning than the fantasy sites do.
But FanDuel’s statement said there are many issues that weren’t considered by the judge when he made this ruling, and that the court will look at them as the case progresses.
“This is only the beginning of the legal process,” FanDuel said.
