New York Attorney General Eric Scheiderman announced today that daily fantasy sports (DFS) contests constitute gambling and as such, are illegal in the state. To that end, he has sent a “cease and desist” letter to market leaders DraftKings and FanDuel, telling them that they must stop accepting action from New York players.
In a statement, obtained by ABC News, Schneiderman said:
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.
In the cease and desist letter, also obtained by ABC News as well as ESPN’s Darren Rovell and David Purdum, Schneider said to DraftKings and FanDuel, “Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under New York law.”
He added, “…each DraftKings/FanDuel wager represents a wager on a ‘contest of chance’ where winning or losing depends on numerous elements of chance to a ‘material degree.’”
Schneiderman’s ruling comes not long after a similar decision was made in Nevada, though that one was by the Nevada Gaming Control Board (NGCB), not the Attorney General. The NGCB also ruled that daily fantasy sports were gambling, but there was not the vitriol in any statement like there was in Schneiderman’s. Instead, the NGCB said that because DFS is gambling, operators would have to be apply for and obtain a license to offer their DFS contests in the state. DraftKings, FanDuel, and other DFS sites did withdraw from Nevada and no longer offer games to people there.
It may come as a surprise to many people that DraftKings and FanDuel have been operating for several years. They had been flying under the radar until this summer, when they began to bombard our eyeballs with commercials featuring “fantasy bros” hoisting million dollar checks. The ads were so annoying and so frequent that many people wished for the sites’ demise because of them.
The straw that broke the camel’s back was potential “insider trading” scandal that erupted in September when DraftKings employee Ethan Haskell accidentally posted Week 3 NFL player draft frequency numbers before all NFL games had started. That same week, he finished second in a FanDuel tournament, winning $350,000. Questions arose as to whether or not he had used that information to help pick his team, but after internal and external investigations, it was found that he did not acquire the information until after his team’s roster had been locked for the week. Nevertheless, the dam was broken. Attorneys General of multiple states began investigations of DFS sites, politicians called for hearings, and the media began questioning the integrity and legality of the games. And now we’re here.
FanDuel, which is headquartered in New York, also released a statement, saying:
Fantasy sports is a game of skill and legal under New York State law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, coworkers and players across the country. The game has been played — legally — in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal.
SHOTS FIRED.