All bets off in New York as AG shuts down DraftKings, FanDuel

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NEW YORK – New York Attorney General Eric Schneiderman ordered Boston-based DraftKings and FanDuel to shut down in his state on Tuesday, calling both illegal online gambling sites.

DraftKings immediately declared its intent to pursue legal response to the Empire State Democrat, according to WBZ News in Boston. Competitor FanDuel in New York slammed the attorney general of its home state, saying his action was politically motivated.

“The game has been played – legally – in New York for years and years, but ater 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,” FanDuel said in a statement tweeted by Nalina Shapiro at a Buffalo television station. The company said the move affects hundreds of thousands of New Yorkers.

Schneiderman was unequivocal in a statement on the two companies’ operations.

“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,” the attorney general’s office said, according to New York’s Daily News.

“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,” Schneiderman said, according to the News. “Today we have sent a clear message: not in New York, and not on my watch.”

Both websites have operated for years and have blanketed media markets like Boston with advertisements touting their games. Both companies maintain that what they offer are games of skill, not chance.

The distinction is vital to their claims that they fit under an exception in the federal law that bans most online gambling. In fantasy sports, players pay entry fees to select real players to be on their virtual sports teams and enter them in competitions whose outcomes are based on the actual performance of those real players on the field. Winners can claim big cash prizes, including some of more than $1 million.

Saying it was “disappointed” by Schneiderman’s action, DraftKings said, “We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love,” in a statement reported by the Daily News.

On its website, the company says: “The legality of daily fantasy sports is the same as that of season long fantasy sports. Federal Law and 45 of the 50 U.S. states allow skill based gaming.”

“Daily fantasy sports is a skill game and is not considered gambling.”

Schneiderman begs to differ. He distinguished between daily fantasy sports sites and traditional fantasy leagues, which he described as legal partly because they rely on months of smart play over the course of several months, the Associated Press reported. DraftKings and FanDuel contests, he wrote, are about “instant gratification” and involve no long-term strategy, AP said.

Ads from the companies, including one from Draft Kings promoting the site as “the simplest way of winning life-changing piles of cash,” mislead players about their chances of winning, Schneiderman said according to the wire service. The top 1 percent of players, he wrote, take home most of the prizes.

People have played fantasy sports games online for decades. But it has been only recently that states and federal authorities have begun to probe the operations of the online gaming sites. Gaming officials in Nevada previously banned DraftKings and FanDuel, calling them illegal betting sites.

In Massachusetts, Attorney General Maura Healey said earlier that DraftKings operations appeared to be legal, but said she wanted to learn more. Lawmakers have suggested the business should be regulated.