It may be a new year, but the battle over the legality of the FanDuel and DraftKings daily fantasy sports sites continues.
New York Attorney General Eric T. Schneiderman initiated the war with a cease and desist letter last October, followed up by a complaint in state court seeking an injunction banning the sites from the state as illegal gambling operations.
In December, a state court judge granted Schneiderman's request and entered a preliminary injunction, but the defendants were granted a stay by the appellate panel on an interim basis.
The AG responded by upping the ante with an amended complaint filed on New Year's Eve requesting that FanDuel and DraftKings return all of the money they earned in New York, and pay a $5,000 civil penalty for each violation of law.
The Appellate Division extended the emergency stay and permitted FanDuel and DraftKings to continue operations in New York, pending a decision on appeal whether fantasy sports constitute illegal gambling under New York law. The sites argued that the injunction would deprive "375,000 New York customers of the contests they love and have been enjoying for years," not to mention that it would cost the defendants millions of dollars.
Despite Schneiderman's contention that daily fantasy sports are "merely a new manifestation of a type of activity that has long been considered gambling," the appellate court said the stay would remain in place until it issues a formal decision on the case later this year.
To read the amended complaint in New York v. FanDuel, click here.
To read the amended complaint in New York v. DraftKings, click here.
To read the appellate court's order, click here.
Why it matters: Despite the win in New York, the legal woes of FanDuel and DraftKings have only gotten more complicated. In the amended complaint, Schneiderman noted the growing number of states that have declared DFS illegal. Most recently, the attorney general of Illinois declared that such sites are gambling operations prohibited by state law, joining a list that includes Georgia, Michigan, and Nevada. He also noted the efforts by the National Collegiate Athletic Association to halt DFS games involving college sports and ban college players from participating in daily fantasy sports sites. The companies are also facing consumer class actions.