Daily fantasy sport sites DraftKings and FanDuel have agreed to stop paid contests in New York while the companies wait for a bill that may legalize the business. Both companies have been embroiled in a heated legal battle for months now with New York State Attorney General Eric Schneiderman, who filed an injunction last fall calling for the banning of daily fantasy sports sites under state law. DraftKings and FanDuel appealed, and were granted the right to continue operating in the state throughout the appeals process. Now both companies are standing down.
"We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last four years," DraftKings said in a statement. "We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love."
DraftKings and FanDuel are hoping daily fantasy sports is legalized in New York
FanDuel was more transparent about the tough choice to cease operations in the most lucrative daily fantasy sports market. "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," the company said in a statement. "We are proud to be one of New York's largest startup companies, and 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."
Schneiderman considers wagering real money on sporting outcomes — even if a fantasy sports context — to be illegal online gambling. DraftKings and FanDuel say they're offering a game of skill, which would exempt the activity from the federal ban on online gambling enacted in 2006. Earlier this month Virginia became the first state to recognize daily fantasy sports sites as a game of skill as long as it's regulated, paving the way for other states to pass similar laws. It appears DraftKings and FanDuel are hoping for a similar outcome in New York, and have decided to hold an appeal until September in exchange for a deal that would end Schneiderman's claims if the industry is legalized and regulated in the state.
"As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it," Schneiderman said in a 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."
Update at 2:40PM ET on Monday, March 21st: Added comment from FanDuel.