Fanduel, Draftkings Challenge New York’s Ban On ‘Illegal’ Daily Fantasy Sports Sites

Fanduel Draftkings says they are not illegal under New York law.

After New York attorney general declared Draftkings and Fanduel illegal, the daily fantasy sites filed separate lawsuits in New York State Supreme Court on Friday. The suits are challenging the state’s ban on daily fantasy games.

In an earlier report from the Inquisitr, Draftkings and Fanduel were declared illegal gambling by the New York attorney general, Eric Schneiderman. On Tuesday, the state sent a letter to the daily fantasy juggernauts ordering them to stop accepting money from New York residents.

According to the letter, Draftkings and Fanduel are illegal sports books under New York law and must stop taking “wagers” from New York citizens.

The attorney general also threatened payment processors who do business with the two DFS companies. The processors were told not to route financial transactions from New York customers or they would face possible consequences.

ESPN reports the daily fantasy sites responded on Friday with documents of their own. Draftkings and Fanduel filed lawsuits against New York demanding the ban be lifted. The petitions stated that the AG’s order is a “shocking overreach” and an illegal intrusion that will cause significant damage to their businesses.

According to the court filings, Fanduel and Draftkings claim Eric Schneiderman’s action makes no sense as they operate rightfully within the law.

“He has unleashed an irresponsible, irrational and illegal campaign to destroy a legitimate industry,” the petitions stated.

In the past, the two sites have defended their legality by claiming they offer games of skill. Fanduel says they have operated openly and legally in New York for years, and the attorney general’s attempt to ban fantasy sports is a political game to garner publicity.

“The only thing that changed today is the Attorney General’s mind,” a spokesperson for Fanduel said.

Draftkings also strongly disagrees with the AG’s office and believes Schneiderman hasn’t taken the time to fully understand their business. They are currently seeking any and all legal options to allow their half million New York customers to continue to play.

Draftkings believes that the AG’s ban will not hold up.

“There is a process by which hasty and uninformed opinions can be challenged in a court of law, which would allow DraftKings to not have to cease operations in the state of New York. We will pursue this fight to the fullest to ensure that New York fantasy sports fans do not need to stop playing the games they love.”

The question of legality of the two companies has come up in other states, as well. State regulators in Nevada say Draftkings and Fanduel are illegal in the state until they obtain a gambling license. Both companies have since ceased operations there.

The New York attorney general believes illegitimate gambling causes social and economic harm, as well as misleads consumers. He wants daily fantasy sites put in the same category and shut down as they cause the same type of public damage.

Schneiderman considers Draftkings and Fanduel illegal under New York law as they attempt to skirt the law through a multi-billion dollar scheme to defraud people nationwide. Schneiderman doesn’t want New York residents to fall victim to their scheme.

In a report from the New York Daily News, the AG’s position is clear. Schneiderman says the job of the New York attorney general is to enforce the law, so shutting down Fanduel and Draftkings is a required action. It’s now up to a New York court to agree.

While the legal system sorts everything out, the two companies want to continue to conduct business in New York. However, as of Friday, Fanduel stopped taking cash deposits from New York residents.

Attorneys for both sides will be in court this week, as the legal fight continues and New York players will have to wait for the final outcome. Meanwhile, other states, as well as the federal government, are considering similar action against the online fantasy sports giants.

The question of whether sites like Draftkings and Fanduel are illegal will most likely be debated for years. Should fantasy sports sites be treated the same as other gambling operations?

[Photo by Scott Olson / Getty Images]