NY attorney general orders Fan Duel, DraftKings to shut down

Nov 11, 2015 10:48 AM

The nation’s two biggest daily fantasy sports companies have been ordered to stop doing business with New York residents.

FanDuel and DraftKings, companies that collected more than $53 million in entry fees from players for NFL games of the past weekend, were told by New York Attorney General Eric Schneiderman Tuesday that their business constitutes illegal gambling under state law and they cannot do business with residents of the state.

New York is the fourth largest state with a population of about 19.4 million and legislators there were already discussing the possibilities for regulating daily fantasy sports contests.

Schneiderman’s opinion appears to apply only to daily fantasy sports competition.

Daily fantasy sports companies have already been told by the Nevada State Gaming Control Board that they cannot do business with Nevada residents until they acquire sports book licenses.

At least a dozen other states are currently studying proposals that could legalize and regulate the business. The booming industry is a tempting target for legislators eyeing the taxable revenue streams it is generating.

FanDuel and DraftKings handle more than 90 percent of the daily fantasy sports business having spent more than $100 million buying television airtime since the start of the football season. Major league sports teams that have opposed legal sports betting have sponsorship arrangements with the companies that the New York AG says are offering illegal gambling.

It makes for a fascinating drama that will making headlines as lawmakers and assorted interests across the country continuing pushing the issue in one direction or another.

The attorney general’s office told the New York Times Tuesday that daily fantasy sports “appears to be creating the same public health and economic problems associated with gambling.”

The two companies can challenge the attorney general’s order in court, according to a New York business law professor who said the state would have to prove that chance is a material factor in fantasy factor, which would make it gambling.

The assorted interests that have been working to promote daily fantasy sports say it is a game in which skill is the determining factor.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].