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Judge blocks daily fantasy sports sites in NY

Posted at 1:04 PM, Dec 11, 2015
and last updated 2015-12-11 16:04:47-05

NEW YORK (AP) — A judge on Friday barred daily fantasy sports sites DraftKings and FanDuel from doing business in New York, ordering the country's two biggest fantasy sports companies to stop taking bets after the state's attorney general argued their operations were illegal gambling.

State Supreme Court Justice Manuel Mendez's order siding with Attorney General Eric Schneiderman comes amid increasing debate about whether customers who participate in the popular online fantasy sports games are competitors or bettors.

Mendez noted in the order that the sites were still allowed to operate in other states where allowed.

"The balancing of the equities are in favor of the NYAG and the State of New York due to their interest in protecting the public, particularly those with gambling addictions," Mendez wrote.

Schneiderman had argued that the sites were placing bets labeled as "entrance fees" to make it seem like it wasn't gambling.

Messages seeking comment from Boston-based DraftKings and New York-based FanDuel were not immediately returned.

The companies have 30 days to respond.

Last month, Schneiderman sent Boston-based DraftKings and New York-based FanDuel cease-and-desist letters after it was revealed in October that a DraftKings employee won $350,000 in a fantasy football contest hosted by FanDuel, raising questions about insider training. The companies have since prohibited their employees from playing on rival sites and conducted an internal probe, saying there was no cheating.

In a court hearing last month before Mendez, lawyers for both companies argued daily fantasy sports were highly competitive games of skill and submitted numerous affidavits by game theory and mathematics professors who detailed how only a few players win a vast majority of the time.

But the attorney general's office said that alone wasn't enough to make the games legal, since ultimately how customers fare depends on events out of their control, such as professional athletes' injuries, weather or even blown calls.

Other states have moved to regulate the online daily fantasy sports companies after both DraftKings and FanDuel mounted an aggressive advertising campaign ahead of the 2015 NFL season. In Massachusetts, lawmakers have proposed specific regulations to protect consumers while regulators in Nevada have restricted their business to existing casinos.