UPDATE, 6 p.m.: An appellate court has ordered an immediate - but temporary - stay of the injunctions imposed earlier on Friday, according to Deadline.
The Fantasy Sports Trade Association had this to say in a press release:
"The FSTA was gratified to see that the appellate court acted so quickly and decisively to stay what we believe was an erroneous lower court decision that failed to address important issues affecting both the companies involved and the legion of New Yorkers who enjoy playing daily fantasy sports. We hope the higher court's action will help encourage Attorney General Schneiderman to work with New York legislators, lawmakers and the FSTA to develop common sense consumer protection measures to ensure that New Yorkers can continue to enjoy the games they love."
Per ESPN's Darren Rovell, FanDuel will allow players in New York to join games starting Friday night.
Daily fantasy sports sites DraftKings and FanDuel are done in New York - at least for now. Attorney Daniel Wallach tweeted early Friday that a New York judge had blocked the two fantasy sports sites, currently engaged in litigation in a Manhattan court aimed at determining whether their games constitute illegal gambling, from continuing operations and offering daily games in New York state for the duration of the trial.
BREAKING: NY Judge blocks DraftKings and FanDuel from offering #DFS contests in NY for duration of case; grants preliminary injunction to AG
— Daniel Wallach (@WALLACHLEGAL) December 11, 2015
You can read the ruling in full, here.
As noted in Judge Manuel J. Mednez's ruling, FanDuel and DraftKings are facing questions of whether their games subject players to "the fraudulent perceptions that the games are winnable."
Daily fantasy sports companies made it this far - and onto your television and computer screens, almost incessantly this year - based on the argument that their games are winnable due to the requirement of actual skill, and not luck, as is the case with most other types of gambling.
When Ethan Haskell, a DraftKings employee, won a large sum of money playing a DFS game on competitor site FanDuel on the same weekend that he published sensitive material - what would be considered "insider information" within the industry - on a social media site prior to lineups for those games being locked, the daily fantasy sports world was thrown into a tailspin.
If Haskell was able to use this information to his benefit - and a report suggested that Haskell's winnings on FanDuel had increased exponentially since joining DraftKings - then it would seem to suggest that the games really are based in skill and Haskell had simply cheated the system.
But in the wake of the controversy surrounding Haskell, an investigation into possible violations of federal law by DFS operators like FanDuel and DraftKings was launched.
Last month, New York Attorney General Eric t. Schneiderman determined that daily fantasy sports game constitute illegal gambling under state law. Mendez sided with Schneiderman's decision.
"New York State penal law does not refer to 'wagering' or 'betting,' rather it states that a person, 'risks something of value,' Mendez wrote. "The payment of an 'entry fee' as high as $10,600 on one or more contests daily could certainly be deemed risking 'something of value.'"
There was an immediate backlash from fans of the games and even a rally outside of Schneiderman's office after his decision was announced - though many of the attendees, it turns out, were DraftKings and FanDuel employees.
Per a New York Times report outlining Schneiderman's decision, DraftKings has - or had, prior to the trial - approximately 500,000 players in New York state. With FanDuel likely claiming a similar tally, it makes sense that, as ESPN's Darren Rovell noted, the companies hired David Boies, one of the most expensive trial lawyers in the world.
How important was keeping business in NY for DraftKings? They hired one of the most expensive trial lawyers in the world. Didn't help here. — Darren Rovell (@darrenrovell) December 11, 2015
Unfortunately, to this point it hasn't made the hoped-for impact. But they'll get their next chance soon. As Wallach notes, the next step is the New York Appellate Division 1st Department, where DraftKings and FanDuel are likely to ask for a "stay" of the injunction granted Friday.
