When New York Attorney General Eric Schneiderman began taking steps to prevent daily fantasy sports sites DraftKings and FanDuel from operating in the state, he left out a little-known third competitor: Yahoo. The tech company known best for its network of media websites and email service has in fact been participating in the type of fast-paced sports betting that some US authorities consider to be unregulated online gambling. Schneiderman has now added Yahoo to his state inquiry with a subpoena issued to the company yesterday, according to a report from The New York Times.
Yahoo transformed its once-benign fantasy sports service — found under its Yahoo Sports portal — into a daily fantasy betting site in July, likely influenced by the meteoric rise of DraftKings and FanDuel. You can now go to Yahoo Sports, find a daily tournament like the "NFL $350K Baller" contest occurring this Sunday, and enter a $10 bet up to 400 times to try and win a $50,000 grand prize.
Yahoo Sports just added daily fantasy betting in July
Daily fantasy sports differ from standard fantasy sports because the game compresses a season-long event into micro-contests happening at high speeds and for massive payouts and losses. Regulators consider the activity no different than online blackjack or poker, both of which were heavily restricted in the US through the Unlawful Internet Gambling Enforcement Act of 2006. "We are monitoring industry trends and events closely and believe that we offer a lawful product for our Daily Fantasy Sports users," Yahoo told the Times in a statement.
DraftKings, FanDuel, and Yahoo may be forced to permanently cease operations in New York if Schneiderman has his way in a court hearing set for November 25th. The Attorney General's office has already used cease-and-desist letters to begin freezing payments made to DraftKings and FanDuel, with the latter publicly announcing yesterday that it has temporarily halted bet-taking from New York residents. Critical to the legality of daily fantasy sports in states like New York, where sports wagering is illegal, is whether the activity is governed by chance. Sites like DraftKings and FanDuel have been operating through a loophole that exempts games of skill from being regulated in the same way that standard gambling is.