This week, the office of the New York Attorney General (the “AG”) announced that it had reached a settlement with both FanDuel and DraftKings, resolving the State’s deceptive marketing practices lawsuit. We had previously blogged about how New York lawmakers mooted the portion of the AG’s lawsuit concerning charges of illegal gambling operations when it enacted legislation formally legalizing the operation of fantasy sports contests. This week’s settlement formally brings the lawsuit against the leading daily fantasy sports operators to an end in its entirety.

What are some of the key takeaways from the FanDuel and DraftKings settlement agreement?

The notable provisions of the settlement agreement include, but are not limited to, the following:

  • Each of the daily fantasy sports operators has agreed to pay a $6 million penalty;
    • The settlement agreement provides for payment of $1 million in 2016, $1 million in 2017, $1 million in 2018, and $3 million in 2019 by each of the respective operators;
  • Acknowledgement by the operators of findings from the AG’s investigation into their respective advertising practices, which were alleged to have targeted users with a propensity for gambling and addiction and determined to be misleading and deceptive;
  • No admission or denial by the operators of any of the AG’s findings;
  • Agreement by each of the operators to undertake significant marketing reforms, including additional disclosures about applicable terms and conditions concerning marketing promotions, rates of success and expected winnings.

Keep Your Fantasy Sports Venture Compliant

Fantasy sports contests and the laws and regulations that govern them, continue to grow and evolve. Between court challenges to newly-enacted legislation, conflicting opinions from attorneys general and various legislative efforts across the country affecting the industry, it is clear that the legal landscape of the fantasy sports space is far from settled. Against this backdrop, it remains imperative to engage competent legal counsel to become/remain compliant with applicable law when setting up or operating fantasy sports contests.