The daily fantasy sports (DFS) industry took another hit Tuesday when New York Attorney General Eric Schneiderman declared DFS contests to be gambling and therefore illegal in the Empire State. He has, in turn, sent the two leading DFS sites, DraftKings and FanDuel, cease and desist letters, telling them that they must leave the New York market. FanDuel is based in New York City.
and ESPN’s David Purdum and Darren Rovell obtained a copy of the letter, which read, in part, “Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under New York law.”
Schneiderman added 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.’”
Thus, daily fantasy players “are clearly placing bets on events outside their control of influence, specifically on the real game performance of professional athletes.”
Of course, the daily fantasy sites point to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which provides a carve-out for fantasy sports even though it outlaws the transfer of funds to and from internet gambling websites. This carve-out lays out three qualifications for a fantasy contest to be legal: 1) prizes must be known in advance and can’t be based on the buy-in or number of players, 2) results must “reflect the relative knowledge and skill of the participants” and be based on statistics generated by athletes across multiple games, and 3) results can’t be based on a point spread or single real-life team or athlete.
Daily fantasy sports sites designed their games to check off all these boxes, so as far as they are concerned, they are legal according to federal law. State law, though, supersedes federal law in this instance. Individual states do not have to permit gambling, DFS or otherwise. Hawaii and Utah have no forms of legal gambling whatsoever.
In a statement obtained by ABC News, AG Schneiderman did not mince words:
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.
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.
That he considers season-long (“traditional”) fantasy sports ok and not daily fantasy sports is curious, but that’s a topic for an entirely separate article.
FanDuel responded, saying “Fantasy sports is a game of skill and legal under New York State law.”
The company’s statement continued, taking aim at Schneiderman just as he took aim at DFS. “This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game 外汇交易平台 they love and share with friends, family, coworkers and players across the country,” FanDuel said. “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.”