New York authorities have ordered fantasy sports sites DraftKings and FanDuel to immediately stop accepting bets. Authorities said that the websites were breaking state law by engaging in illegal gambling.
State Attorney General Eric Schneiderman said, "It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country. Today, we have sent a clear message: not in New York, and not on my watch."
FanDuel, DraftKings and other similar companies have denied the accusation that they are running gambling operations. They said that their games rely on the skill of its participants rather than pure chance. Both companies have also denied allegations made in September 2015 of 'insider trading' after it emerged an employee of DraftKings had won $350,000 on the FanDuel site. The companies insist that there was no wrongdoing, and the employee in question did not make use of privileged information.
FanDuel also challenged the New York statement that their game constituted illegal gambling. The company said, "Fantasy sports is a game of skill and legal under New York state law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country."
The New York decision mirrors a similar ruling by authorities in Nevada in October 2015, where the state attorney general said, "Fantasy sports sites should be classified as sports betting, requiring licenses to operate."
FanDuel and DraftKings both ceased operations in Nevada as a result of the ruling, but the New York decision has far greater implications for both companies. FanDuel's headquarters are in New York while DraftKings is based in Boston. Both the companies are spending heavily promoting the games in New York.
Schneiderman said, "Fantasy sites were neither victimless nor harmless. Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers."