FanDuel and DraftKings locked out of NY. They're already riding their payables for their advertising blitz, so this will be another blow.
From WSJ
New York Court Orders DraftKings, FanDuel to Cease Operating in State
Daily fantasy operators must shut down business in state while case is heard in court
Workers set up a DraftKings promotions tent in Foxborough, Mass. in October, before an NFL football game. A New York court Friday ordered DraftKings and FanDuel Inc., the industryās major players, to shut down in the state during arguments over the legality of fantasy sports. Photo: Charles Krupa/Associated Press
By Sharon Terlep
Updated Dec. 11, 2015 12:32 p.m. ET
A New York court on Friday ordered the two largest fantasy sports operators to shut down in the state while they battle in court with the stateās attorney general over whether the games constitute illegal gambling.
State Supreme Court Judge Manuel Mendez denied a request by the two companies to remain operating in the state as they argue in court.
He said the decision is ānot a final determination of the merits and rights of the parties.ā But the ruling is a significant blow to the daily fantasy industry and included some ominous words from Judge Mendez. He said protecting the public from a potentially harmful pastime āoutweighs any potential loss of businessā and that the attorney general doesn't need to prove āirreparable harmā to win its case.
The ruling pleased New York Attorney General Eric Schneiderman, who last month requested an injunction to ban FanDuel Inc., and DraftKings Inc., the industryās major players, from accepting money from New York residents. The decision is āconsistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law,ā the attorney general said in a statement.
The companies said they would appeal the ruling. Lawyers for the operators argued to Judge Mendez that they should be allowed to operate until the matter is settled at trial. A DraftKings lawyer has said getting banned in New York would be āa disasterā for the company.
āNew Yorkers have been able to legally play our games for more than six years, and todayās preliminary decision was wrong and we expect we will ultimately be successful,ā FanDuel said in a statement.
āDaily 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,ā DraftKings said in a statement.
New York delivers the biggest contingent of daily fantasy players, accounting for 12.8% of players, followed by California with 9.7% and Illinois with 6.7%, according to Eilers Research LLC, which tracks the gaming industry.
FanDuel stopped accepting money from New York residents shortly after the attorney generalās injunction request. DraftKings has continued to allow players from the state.
In a hearing earlier this week with state lawmakers, officials from both companies argued that government regulation, not an outright ban, is the appropriate course of action. Some legislators were amenable to that idea while others said they were unconvinced.
The attorney generalās office has said daily fantasy sports constitute gambling because players are āplacing bets on events outside of their control or influenceā and because games are based on one week or a day of action, unlike traditional fantasy-sports formats where players are drafted for a full season.
The operators said daily fantasy is a game of skill and not akin to gambling.
The fight in New York comes amid a federal investigation into the industry and scrutiny from state regulators. A handful of other states have previously said fantasy sports amounts to gambling and isnāt allowed. But the New York attorney generalās cease-and-desist order is the first time fantasy-sports operators have been formally accused of criminal activity.
The order issued Friday by Judge Mendez also denied attempts from the countryās two biggest daily fantasy sports operators to block the attorney generalās enforcement action.
Write to Sharon Terlep at sharon.terlep@wsj.com
From WSJ
New York Court Orders DraftKings, FanDuel to Cease Operating in State
Daily fantasy operators must shut down business in state while case is heard in court
Workers set up a DraftKings promotions tent in Foxborough, Mass. in October, before an NFL football game. A New York court Friday ordered DraftKings and FanDuel Inc., the industryās major players, to shut down in the state during arguments over the legality of fantasy sports. Photo: Charles Krupa/Associated Press
By Sharon Terlep
Updated Dec. 11, 2015 12:32 p.m. ET
A New York court on Friday ordered the two largest fantasy sports operators to shut down in the state while they battle in court with the stateās attorney general over whether the games constitute illegal gambling.
State Supreme Court Judge Manuel Mendez denied a request by the two companies to remain operating in the state as they argue in court.
He said the decision is ānot a final determination of the merits and rights of the parties.ā But the ruling is a significant blow to the daily fantasy industry and included some ominous words from Judge Mendez. He said protecting the public from a potentially harmful pastime āoutweighs any potential loss of businessā and that the attorney general doesn't need to prove āirreparable harmā to win its case.
The ruling pleased New York Attorney General Eric Schneiderman, who last month requested an injunction to ban FanDuel Inc., and DraftKings Inc., the industryās major players, from accepting money from New York residents. The decision is āconsistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law,ā the attorney general said in a statement.
The companies said they would appeal the ruling. Lawyers for the operators argued to Judge Mendez that they should be allowed to operate until the matter is settled at trial. A DraftKings lawyer has said getting banned in New York would be āa disasterā for the company.
āNew Yorkers have been able to legally play our games for more than six years, and todayās preliminary decision was wrong and we expect we will ultimately be successful,ā FanDuel said in a statement.
āDaily 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,ā DraftKings said in a statement.
New York delivers the biggest contingent of daily fantasy players, accounting for 12.8% of players, followed by California with 9.7% and Illinois with 6.7%, according to Eilers Research LLC, which tracks the gaming industry.
FanDuel stopped accepting money from New York residents shortly after the attorney generalās injunction request. DraftKings has continued to allow players from the state.
In a hearing earlier this week with state lawmakers, officials from both companies argued that government regulation, not an outright ban, is the appropriate course of action. Some legislators were amenable to that idea while others said they were unconvinced.
The attorney generalās office has said daily fantasy sports constitute gambling because players are āplacing bets on events outside of their control or influenceā and because games are based on one week or a day of action, unlike traditional fantasy-sports formats where players are drafted for a full season.
The operators said daily fantasy is a game of skill and not akin to gambling.
The fight in New York comes amid a federal investigation into the industry and scrutiny from state regulators. A handful of other states have previously said fantasy sports amounts to gambling and isnāt allowed. But the New York attorney generalās cease-and-desist order is the first time fantasy-sports operators have been formally accused of criminal activity.
The order issued Friday by Judge Mendez also denied attempts from the countryās two biggest daily fantasy sports operators to block the attorney generalās enforcement action.
Write to Sharon Terlep at sharon.terlep@wsj.com
