It looks like fans will have to find something else to do to kill time between game days. The New York attorney general, Eric Shneiderman, said today that fantasy sports qualify as illegal gambling in his state, and he wants fan websites like DraftKings and FanDuel to stop. He asked that they stop accepting wagers from residents of New York - but he isn't acting in a manner to force them to stop their operations. Yet.
"Our review concludes that DraftKings'/FanDuel's operations constitute illegal gambling under New York law," Schneiderman wrote in the letter, according to The New York Times.
This is a huge blow to a billion dollar industry that paints the landscape of sports. These websites have been growing for years, and have used the Unlawful Internet Gambling Enforcement Act of 2006 as their defense when it has come up. They said that their websites required skill because they had to pick the best players. However, Schneiderman found that "each DraftKings/FanDuel wager represents a wager on a 'contest of chance' where winning or losing depends on numerous elements of chance to a 'material degree.'"
It was with that criteria the Schneiderman reasoned that they needed to stop taking wagers beause users "are clearly placing bets on events outside their control of influence, specifically on the real game performance of professional athletes."
"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," Schneiderman said in a statement. "Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-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."
"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, coworkers and players across the country. The game has been played -- legally -- in New York for years and years, but after the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal. We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General's mind."
DraftKings also had something negative to say about the Attorney General:
"We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill," DraftKings said in a statement. "We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.
"We continue to see a number of other officials, including Senator Negron in Florida, Representative Zalewski in Illinois and the Federal Trade Commission, take a reasoned, informed and measured approach to the daily fantasy sports business. We hope this trend continues along with due consideration for over 56 million sports fans across the country who enjoy playing fantasy sports. We remain committed to working with all relevant authorities to ensure that our industry operates in a manner that is transparent and fair for all consumers.
"New York's actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers."
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Schneiderman fights that he is just looking out for the health and welfare of his citizens, citing that he was "concerned to learn from health and gambling experts that daily fantasy sports appears to be creating the same public health and economic problems associated with gambling, particularly for populations prone to gambling addiction and individuals who are unprepared to sustain losses lured by the promise of easy money."