Legal battle ensues over operations of two daily fantasy sports sites in New York
A New York judge had released a statement saying he will not take too much time in deciding about the motion to halt the operations of two of the country's largest daily fantasy sports site, which was filed by top New York officials. Justice Manuel Mendez informed lawyers of DraftKings and Fan Duel as well as the assistant attorney general that they should expect his decision soon.
Previously, Attorney General Eric Schneiderman sent both daily fantasy sports companies a cease and desist order after he declared the businesses to be illegal betting operations, hence they should be shut down. The companies countered that the competitions they are hosting are based on skills and have been done for several years already. In addition, they said media companies invested in the competitions because these companies deemed the contests legal as well as the other sporting teams and investors that also invested in the company.
The games talked about here involve customers paying in order to form a roster of actual pro athletes to compete against another group of pro athletes in web-based leagues. The games came under a lot of inquiry after both daily fantasy sports companies advertised heavily to promote the games to sports fans before the 2015 NFL season.
After an employee of DraftKings defeated over 200,000 other players from their competitor FanDuel and won $350,000, insider trading questions were raised. This prompted Schneiderman to start an investigation and ask the companies to surrender the results of their own internal investigation. An assistant attorney general further explained the case against the companies. She said that even though forming a competitive team may need skill, at the end the competitions involve wagering on the actual performance of the players in real life subject to conditions they cannot control like injuries and rain delays.
FanDuel's lawyer John Kiernan argued that the company's competitions are very much skill-based and involve only events separate from those taking place on the field. Meanwhile, David Boies, who is representing DraftKings, reasoned that because season-long fantasy sports are allowed under the state regulation, daily fantasy sports should be too.
Since the cease and desist order has been tendered, New Yorkers are no longer accepted in FanDuel. Both companies also claimed that payment processors were pressured to abandon the thousands of New Yorker requests for payments. The companies stated that they are open to be under regulation and implement policies for consumer protection, yet they argue that this should be spearheaded by legislatures instead of the courts.