It what should not come as much of a surprise, a New York judge has denied the temporary restraining order daily fantasy sports (DFS) companies FanDuel and DraftKings filed against New York Attorney General Eric Schneiderman. The motions were filed Monday morning and by Monday night, New York Supreme Court Justice Manuel Mendez had shot them down.
Last week, after a month-long investigation, Schneiderman declared that daily fantasy sports were gambling and sent cease and desist letters to FanDuel and DraftKings. In a public statement, he came down hard on the sites, saying:
Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers. Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.
According to ESPN.com, the motions that were filed by the DFS sites argued that Schneiderman “unilaterally and unconstitutionally determined their product was illegal within the state” and even went so far as to urge partners of the sites to stop working with them.
So now, while Schneiderman is going to try to force DraftKings and FanDuel from doing business in New York (FanDuel is actually based in the state), the two sites have no plans to back down.
Josh Schiller, an attorney from Boies, Schiller and Flexner told ESPN.com on behalf of DraftKings, “We look forward to our day in court. Daily fantasy sports are not an illegal gambling operation, and there’s no credibility to the argument that season-long fantasy could be legal while daily fantasy isn’t. Daily fantasy requires more skill and less chance.”
Amongst the arguments DraftKings makes to say daily fantasy sports is not gambling are:
- A study by Gaming Laboratories International showed that lineups created by “skilled” players beat random rosters more than 80 percent of the time for baseball, basketball, football, and hockey combined. In NBA games, that figure was over 96 percent.
- Contest entry fees are not bets; the case Humphrey v. Viacom is used as precedent.
- DraftKings isn’t a bookmaker because it only benefits from volume, not from who wins or loses.
On Friday, FanDuel did announce that it will start limiting action from New York players to an extent, saying that New Yorkers are no longer allowed to make new deposits. Withdrawals can still be made, though. FanDuel did say that this past weekend’s contests were still live for New York players and nothing in the press release implied that those who already had money on the site couldn’t keep playing.
“FanDuel is one of the largest tech startups in New York, employs hundreds of people in this state, and has been a source of entertainment for all of you over the last five years,” FanDuel wrote on its site. “We are honored to have helped build this community of fantasy players and will exhaust all legal options in our pursuit to continue to be a part of your lives.”
Representatives and legal teams from the two sites are expected to appear in court on November 25th to argue their cases.
