New York Attorney General Eric Schneiderman got his wish today when the state's attorney general's office announced that DraftKings and FanDuel would stop operating paid contests in the state immediately.
Schneiderman was granted a preliminary injunction by a New York state district court back on Dec. 11 after he sent a cease and desist letter to both daily fantasy sports (DFS) companies. DraftKings and FanDuel appealed the injunction and were granted a stay to continue offering paid contests in New York for the following three months.
However, that run has come to an end and both companies have reached an agreement with Schneiderman during which they'll wait on the pending legislation regarding the state's gambling laws (the New York legislature runs until the middle of June) as well as appeal the hearing, which will take place in September.
"As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it," Schneiderman said. "Today's agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue."
Similarly, FanDuel reached an agreement with the Texas Attorney General's office earlier this month to halt paid contests once the month of May hits. DraftKings opted to bypass the agreement and instead will take the state to court.
DraftKings and FanDuel have argued they are not violating any New York state laws because they offer games of skill rather than games of chance. If a judge were to agree with that argument, then both companies would indeed be in accordance with state and federal laws, but that is going to be up the discretion of a law expert.
It seems as if this issue is mostly going to be settled on a state-by-state basis as more than 30 states are currently considering legislation regarding daily fantasy sports. Arizona, Hawaii, Iowa, Louisiana, Montana and Washington already prohibit it.
But New York will be an important one for DraftKings and FanDuel as it's the most lucrative state for DFS besides California.
