Daily Fantasy Sports Companies Settle with NY


Daily Fantasy Sports Companies Settle with NY

By Burt Carey

Daily fantasy sports giants DraftKings and FanDuel have discontinued paid contests in New York in settlement struck with New York’s attorney general.
daily fantasy sports, DraftKings, FanDuel, Bonacic’s legislation, New York, gaming“As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it,” said New York Attorney General Eric Schneiderman in a prepared statement. “Today’s agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division.”

In November Schneiderman issued cease and desist letters to both companies, having defined the fantasy sports operations as “totally unregulated gambling venues,” according to New York state law. The case has been in litigation since then, and the New York Supreme Court heard arguments on Nov. 25.


Under the settlement, both FanDuel and DraftKings have agreed to stop operating paid contests to New York residents with IP addresses originating in the state. The companies also agreed to delay a legal appeal until September, pending legislative action that would allow paid daily fantasy sports. Schneiderman also filed a false advertising suit against both companies. That lawsuit is not affected by the settlement reach Monday.

“We believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York,” said a spokesperson for FanDuel.

A DraftKings corporate statement said the company would continue to work with state lawmakers to enact fantasy sports legislation.

Online users of daily fantasy sports leagues pay an entry fee to select real professional sports athletes. Fantasy players then have a chance to win money based on the performance of those athletes.

Daily fantasy sports operators are facing legal challenges in a number of states, including Nevada and Texas. Both DraftKings and FanDuel have characterized their operations as games of skill. Schneiderman and other attorneys general disagree, saying daily fantasy sports schemes are games of chance.

The games are popular throughout the country and across the globe. Both DraftKings and FanDuel are multi-billion corporations.

Several New York lawmakers have filed legislation to accommodate daily fantasy sports. Among them, Senate Bill 6793, sponsored by Sen. John Bonacic, appears to be the most likely to move forward. Bonacic chairs the Senate Racing and Gaming Committee.

“Previously, I stated that regulation of interactive fantasy sports was one of my budget priorities,” Bonacic said this week. “The announcement of the settlement today between the attorney general and two of the largest fantasy sports operators brings this issue to the forefront and I look forward to working with my colleagues in the Senate and Assembly, and the Governor, to see it addressed during the budget process.”

Bonacic’s legislation would create a Fantasy Sports Contest Division within New York’s Financial Frauds and Consumer Protection Unit, which would be charged with regulating and licensing, and daily fantasy sports companies that were operating in the state prior to Nov. 10 would be allowed to continue operations while their application is under consideration. New York would charge a one-time fee of $500,000 to any daily fantasy sports company applying for a license, and 15 percent of gross revenue generated by New York players would be assessed. Players would have to be a minimum of 18 years old.