FanDuel, DraftKings Will Stop Game Operations In New York

By Jenn Loro - 23 Mar '16 06:59AM

Daily fantasy sports companies DraftKings and FanDuel have both decided to temporarily suspend their operations in New York as they both wait for an appellate court hearing in September after a long legal tussle with the state's Attorney-General's Office.

The two companies now pin their hopes on lobbying lawmakers to make way for the legalization of the games.

"This is a decisive and important victory for the rule of law in New York state. No company or individual no matter how powerful or well financed is above the law," Attorney General Eric Schneiderman after reaching an agreement with the companies as quoted by Reuters.

Currently, New York is the second-largest daily fantasy sports market after California. For Manhattan-based FanDuel, the state is a 'critical' base due to its lucrative market size and dynamic economy.

"New York is a critical state for FanDuel. FanDuel is headquartered in Manhattan, where we employ more than 170 young, smart, passionate fans who are committed to innovating and providing the best fantasy experience possible...while it is disheartening for us to restrict access to paid contests in our home state, 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," reads the company's official statement as quoted by NPR.

The ongoing legal battle erupted when Schneiderman filed an injunction last September which called for the closure of the daily fantasy sports companies as defined by existing state restrictions on online gambling. For the attorney general, betting money on sports outcomes-fantasy or real- is illegal.

However, DraftKings and FanDuel argued that fantasy games are not betting per se but more of a game of skill not covered by an existing ban on online gaming. The absence of explicit state laws concerning fantasy sites only makes the legal tussle an uphill battle both for Schneiderman and the two companies.

Meanwhile, Virginia became the first US state to explicitly recognize daily fantasy sports sites as a game of skill effectively legalizing it under a set of regulations as reported by The Verge. Virginia offered a precedence leading other states to pass similar legislations.