On Monday, the efforts made by the two biggest daily fantasy-sports firms for preventing the attorney general of New York from shutting down their operations within the state were just shot down. A state court had been requested by FanDuel Inc. and DraftKings Inc. to prevent Eric Schneiderman, the New York Attorney General, from acting on the cease-and-desist order that had been sent by him to the businesses in the previous week. That request was denied by a judge on Monday. A court hearing is to be held on November 25th regarding the matter.
According to the attorney general, the daily fantasy games are quite similar to illegal gambling, which means they are also subject to criminal penalties because of which FanDuel and DraftKings have to shut down. The daily fantasy industry is dominated by these two companies and Mr. Schneiderman called them a leaders of a huge multi-billion dollar scheme that’s aimed at scamming sport fans all over the country and evading the law. In response to the statement, the two firms asserted that their operations couldn’t be constituted as gambling as the games are legal and require skill. Separate complaints were filed by each of the companies in Manhattan’s state Supreme Court.
They had put in a request to Judge Manuel Mendez for issuing a restraining order to put off the attorney general until the date of the court hearing. As per the arguments presented by the companies, the attorney general cannot prevent citizens of New York from playing the daily fantasy sports because he simply doesn’t have the authority to do so. In a statement made after the order, DraftKings Inc. said that the company was sure of their legal standing whereas no comment was made by FanDuel. However, the latter had announced on Friday that new deposits weren’t being accepted from New York-based players.
A spokesman from the office of the attorney general asserted that a suit would be filed against the companies as soon as tomorrow for shutting down their operations. Previously, a number of states have stated that fantasy sports are the same thing as gambling and aren’t permitted. However, the cease-and-desist order sent on Tuesday in New York is the first of its kind that has accused the fantasy sports operators of indulging in criminal activity. The industry is already scrambling to recover from the consequences of an incident in the previous month when an employee of DraftKings had admitted to releasing sensitive data about the biggest contest of the site on a fantasy-sports message board.
He also won a sum of $350,000 on FanDuel in the same week and this fact has been acknowledged by both companies. The leak was termed as an accident by DraftKings and both firms asserted that the employee hadn’t benefitted from having early access to the data. Last month, regulators in Nevada had ordered daily fantasy-sports site to close down and only operate in the state when they had a gambling license. The move was foreseen since the casino industry of the state is opposed to fantasy sports.