Industry Updates

FanDuel and DraftKings Cleared to Operate in New York – For Now

Image credit: David Phan

The beleaguered FanDuel/DraftKings duo finally got a break in New York earlier today. An appeals court confirmed that both sites may continue operating in New York until the showdown between state attorney general Eric Schneiderman and daily fantasy is settled once and for all.

Today’s decision was an important victory in the short term for both sites. Various reports have it that New York state accounts for roughly 10% of both sites’ customer bases. Losing New York would have made it just that much more difficult for FanDuel and DraftKings to continue fighting in New York, Illinois and elsewhere.

The sites were already benefitting from a temporary, emergency stay on Schneiderman’s original order for both sites to shut down. The original stay was issued in December and was only expected to last through part of January – just enough time for the fantasy sites to finish the NFL regular season. Today’s ruling makes the stay more permanent – or at least until their appeal is heard in front of the New York Supreme Court.

ESPN managed to catch up with FanDuel and DraftKings for statements regarding today’s development. FanDuel’s statement read as follows:

“We are grateful for the legions of New York fantasy sports players that the permanent stay entered today ensures they can continue to participate in our games here as the case progresses. We are confident that fantasy sports have always operated lawfully in New York, but we do believe that new, common-sense regulations to protect consumers and reflect the evolution and growth of the game are needed. The New York legislature, like many states around the country, is working towards such regulation, and we will work with them to achieve it.”

You can follow this link to see both statements in full at ESPN.

If you need a little refresher, the big battle in New York started this past November when attorney general Eric Schneiderman suddenly declared that the FanDuel/DraftKings business models are a form of illegal gambling. He demanded both sites to cease operations immediately following that announcement.

Both sites initially resisted the order and then later asked an appeals court to issue a stay on Schneiderman’s demand. A last minute appeal yielded success and resulted in both sites being able to continue operations until a full panel of judges could weigh the merits of the appeal and issue a firm ruling. The answer finally came today, with the ruling giving both sites permission to continue operating until the whole matter is settled.

FanDuel and DraftKings still face an uphill battle in New York, but today’s news will at least let the sites maintain the status quo until we get a final work one way or another. Additionally, the ruling gives both sites more time to argue for friendly legislation. As we noted in a previous post, the NY Committee on Racing and Wagering has expressed a desire to legalize and regulate daily fantasy sports.

More specifically, the chairman of the committee said “if the court rules it’s illegal, we’ll do something probably to leglaize it.”

Favorable legislation from the Committee on Racing and Wagering could go a long way towards solving this entire issue even if Schneiderman is successful in his bid to have DFS classified as illegal gambling. An exemption would give fantasy sites the green light in New York. However, nothing is guaranteed at this point. We’ll take any good news we can get in the meantime.

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