Welcome Guest
Log In | Register )
You last visited December 8, 2016, 4:15 am
All times shown are
Eastern Time (GMT-5:00)

NY attorney general says that DraftKings and FanDuel constitute illegal gambling

Online GamblingOnline Gambling: NY attorney general says that DraftKings and FanDuel constitute illegal gambling
52
Rating:

The New York State attorney general on Tuesday ordered the two biggest daily fantasy sports companies, DraftKings and FanDuel, to stop accepting bets from New York residents, saying their games constituted illegal gambling under state law.

The cease-and-desist order by the attorney general, Eric T. Schneiderman, is a major blow to a multibillion-dollar industry that introduced sports betting to legions of young sports fans and has formed partnerships with many of the nation's professional sports teams.

Given the New York attorney general's historic role as a consumer-protection advocate, legal experts said the action was likely to reverberate in other states where legislators and investigators are increasingly questioning whether the industry should operate unfettered by regulations that govern legalized gambling.

"It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country," Mr. Schneiderman said, adding, "Today we have sent a clear message: not in New York, and not on my watch."

Fantasy sports companies contend that their games are not gambling because they involve more skill than luck and were legally sanctioned by a 2006 federal law that exempted fantasy sports from a prohibition against processing online financial wagering. That view is being challenged as fantasy sites have begun offering million-dollar prizes and bets on individual sports, such as golf, mixed martial arts and Nascar races, magnifying the element of chance and making the exemption more difficult to defend.

On Tuesday afternoon, as news of the attorney general's order began to trickle out, DraftKings sent an email to its players, saying, "Attorney General Eric Schneiderman is considering preventing New Yorkers from playing daily fantasy sports," and added: "Hey, New York, protect your right to keep playing daily fantasy sports. Contact the attorney general today!"

(See the attorney general's letter to FanDuel in Related Links below.)

Sabrina Macias, a spokeswoman for DraftKings, said, "We're disappointed he hasn't taken the time to meet with us or ask any questions about our business model before his opinion." She said there were more than 500,000 daily fantasy sports users in New York State.

Eric Soufer, a spokesman for the attorney general, disputed Ms. Macias's account, and said the attorney general's office had multiple meetings with representatives from DraftKings before issuing the order.

In response to the letter it received from the attorney general, DraftKings said, "We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available."

In a statement, FanDuel said: "Fantasy sports is a game of skill and legal under New York state law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country."

The two companies can challenge the attorney general's order in court. According to Joseph M. Kelly, a professor of business law at the State University College at Buffalo, the state would have to prove that chance is a material factor in fantasy sports, which would make it gambling.

Players who bet on fantasy sports assemble their own teams of professional athletes who compete based on their statistical performances in games. Mr. Schneiderman's order does not apply to seasonal competitions or to other companies that offer fantasy games.

By concluding that daily fantasy games constitute gambling, Mr. Schneiderman has also directed an uncomfortable spotlight on some professional sports leagues that oppose gambling while maintaining financial partnerships with daily fantasy sports sites.

A recent New York Times investigation reported that operators of online gambling sites had begun investing in fantasy companies and that some of DraftKings' senior managers came from online gambling companies or were professional poker players.

Mr. Schneiderman began investigating the fantasy sites after a DraftKings employee inadvertently released internal betting data and that same week won $350,000 on FanDuel, which is based in New York. DraftKings hired an outside law firm to investigate the matter, and found that the employee did nothing wrong. Both fantasy companies had allowed employees to bet on rival sites, but no longer do. Mr. Schneiderman asked the two companies for internal data and details on how they prevent fraud.

Nevada regulators ruled last month that daily fantasy sports should be considered gambling, and ordered fantasy companies to suspend operations until they secured gaming licenses. A Florida grand jury has subpoenaed records of the fantasy sports trade group, the United States attorney in Manhattan has begun an investigation, and the F.B.I. office in Boston, where DraftKings' headquarters are, has begun interviewing fantasy players.

In addition, nearly a dozen states are considering some form of fantasy sports legislation, according to GamblingCompliance, an independent service that monitors gambling legislation.

The attorney general's office also said that ads on the two sites "seriously mislead New York citizens about their prospects of winning." State investigators found that to date, "the top 1 percent of DraftKings winners receive the vast majority of the winnings."

For much of the N.F.L. season, DraftKings and FanDuel have blanketed television with advertising, spending more than $100 million each, and consistently ranking among the top companies each week in buying airtime.

Last September, FanDuel said it was signing 20,000 to 30,000 players every day. Major League Baseball, the N.B.A. and companies like Comcast, NBC and Google are among its investors. Nearly every N.F.L. team has a sponsorship deal with DraftKings or FanDuel, and two powerful N.F.L. owners — Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots — have equity stakes in the companies.

The attorney general's office said daily fantasy sports "appears to be creating the same public health and economic problems associated with gambling." The National Council on Problem Gambling says it has received reports of "severe gambling problems" in some people who play daily fantasy sports, while noting that seasonal competitions with minimal prizes "offer little risk." 

Thanks to four4me for the tip.

NY Times

We'd love to see your comments here!  Register for a FREE membership — it takes just a few moments — and you'll be able to post comments here and on any of our forums. If you're already a member, you can Log In to post a comment.

17 comments. Last comment 1 year ago by realtorjim.
Page 1 of 2
music*'s avatar - nw bookeep.jpg
Happy California
United States
Member #157856
August 2, 2014
1520 Posts
Offline
Posted: November 11, 2015, 11:20 am - IP Logged

 I am biased in saying that only Mega Millions & Power Ball should be played. LOL Stay with the Lottery!

Surrender

 I've been rich and I've been poor. Believe me, rich is better. 

 Attributed to Joe E. Lewis and others

    RedStang's avatar - tallman zps6gf4inoc.jpg
    NY
    United States
    Member #121961
    January 21, 2012
    3157 Posts
    Offline
    Posted: November 11, 2015, 12:55 pm - IP Logged

    Morons call it illegal because their not getting a piece of the pie. If they made money they would come up with some kind of loop hole to let it pass.

      CARBOB's avatar - FL LOTTERY_LOGO.png
      ORLANDO, FLORIDA
      United States
      Member #4924
      June 3, 2004
      5896 Posts
      Offline
      Posted: November 11, 2015, 1:04 pm - IP Logged

      Morons call it illegal because their not getting a piece of the pie. If they made money they would come up with some kind of loop hole to let it pass.

      The ruling will be challenged in a higher court. The final decision will be interesting. I think the betting on fantasy games is illegal and it is all about money. If the government can't get it, no one can.

        Avatar
        Las Vegas, NV
        United States
        Member #44841
        August 9, 2006
        1749 Posts
        Offline
        Posted: November 11, 2015, 1:34 pm - IP Logged

        Who here (especially on this site) can't see that its illegal gambling?  And who here on this site is okay with those two sites being able to get away with supposed "fantasy" sports betting when its "illegal" to play daily numbers, lotto, mega etc. (all the things this site here is dedicated to) across state lines? And for the few states that even are on board with online waging you have to physically be in that particular state to be able to play?  Sheesh.  If I wanted to donate my money to NY's numbers but I live in Vegas I should be able to ... the same way people want to bet on sports.  Gambling is gambling so I say GOOD ... shut them down ... until everyone is able to play any form of game of chance online within the borders of the US that they want.

        I was tired of seeing those stupid-a$$ commercials anyway!  It was like pouring salt in the wounds of other "gamblers"!

          sully16's avatar - sharan
          Ringleader
          Michigan
          United States
          Member #81740
          October 28, 2009
          40497 Posts
          Offline
          Posted: November 11, 2015, 2:13 pm - IP Logged

          Who do they think they are telling people how they can or cannot spend their hard earned money.

          Vote them out.

          Did you exchange a walk on part in the war ?

          For a lead role in a cage?

           

                                                      From Pink Floyd's " Wish you were here"

            Avatar

            Canada
            Member #154380
            April 14, 2014
            57 Posts
            Offline
            Posted: November 11, 2015, 2:23 pm - IP Logged

            Who do they think they are telling people how they can or cannot spend their hard earned money.

            Vote them out.

            So you are saying every product should be legal as long as someone is spending "their hard earned money" to purchase the product. Correct?

              Todd's avatar - Cylon 2.gif
              Chief Bottle Washer
              New Jersey
              United States
              Member #1
              May 31, 2000
              23267 Posts
              Offline
              Posted: November 11, 2015, 3:01 pm - IP Logged

              I have two thoughts on this:

              1. I don't think this is gambling per se, but rather a competition that involves skill as well as luck.
              2. It's ridiculous in the first place that any form of gambling is illegal.  Why should I be able to spend my money on a lottery ticket, but not be able to bet on the outcome of a dice roll?  The only difference is that the government raises income with one form of gambling, but not the other.  There is no moral difference between them.

               

              Check the State Lottery Report Card
              What grade did your lottery earn?

               

              Sign the Petition for True Lottery Drawings
              Help eliminate computerized drawings!

                MaximumMillions's avatar - Lottery-013.jpg

                Germany
                Member #164603
                March 8, 2015
                612 Posts
                Offline
                Posted: November 11, 2015, 3:58 pm - IP Logged

                I have two thoughts on this:

                1. I don't think this is gambling per se, but rather a competition that involves skill as well as luck.
                2. It's ridiculous in the first place that any form of gambling is illegal.  Why should I be able to spend my money on a lottery ticket, but not be able to bet on the outcome of a dice roll?  The only difference is that the government raises income with one form of gambling, but not the other.  There is no moral difference between them.

                Concerning your second point, I'd assume the government could still tax winnings on these skill games as they might do with poker?

                  mypiemaster's avatar - 2015021003pileofcash
                  JACKPOT HUNTER

                  United States
                  Member #141034
                  April 2, 2013
                  1408 Posts
                  Offline
                  Posted: November 11, 2015, 5:05 pm - IP Logged

                  It's very simple knuckleheads. It's all about MONOPOLY, COMPETITION and TAXATION.

                  Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

                  Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

                    grwurston's avatar - Cute animals_Spider.jpg
                    Winning makes me smile.
                    bel air maryland
                    United States
                    Member #90251
                    April 24, 2010
                    4874 Posts
                    Offline
                    Posted: November 11, 2015, 6:37 pm - IP Logged

                    Game odds, point spreads, over-unders  etc,  for all the major sports are printed in newspapers every day. But this is illegal? Perhaps the legal gambling entities are some how behind this because they fear losing some business, IE $$$. I find it ironic that Nevada, the mecca of gambling in this country, does not have a State lottery. Obviously the gambling industry there does not want competition.

                    "You can observe a lot just by watching." Yogi Berra, Hall of Fame baseball player.

                    The numbers will tell you what numbers to play. Pay attention to the numbers.

                    Don't just think outside the box, crush it.

                      sully16's avatar - sharan
                      Ringleader
                      Michigan
                      United States
                      Member #81740
                      October 28, 2009
                      40497 Posts
                      Offline
                      Posted: November 12, 2015, 8:19 am - IP Logged

                      So you are saying every product should be legal as long as someone is spending "their hard earned money" to purchase the product. Correct?

                      No, that's not what I am saying, People should be able to spend their money any way they want, legal or not, smart or dumb, big or small.

                      Did you exchange a walk on part in the war ?

                      For a lead role in a cage?

                       

                                                                  From Pink Floyd's " Wish you were here"

                        Avatar
                        New Member
                        Florida
                        United States
                        Member #117415
                        October 5, 2011
                        3 Posts
                        Offline
                        Posted: November 15, 2015, 11:16 am - IP Logged

                        The 2006 anti-gambling bill was stuck in with a port bill, nobody read it, and George W. Bush signed it, so I say it was illegally made into law. By the way, isn't the government gambling with our money? They send billions to terrorist countries overseas, it's a gamble to allow thousands of Syrian refugees to come here. Who will win that bet?

                          Avatar
                          NY
                          United States
                          Member #23835
                          October 16, 2005
                          3474 Posts
                          Offline
                          Posted: November 16, 2015, 2:02 am - IP Logged

                          No, that's not what I am saying, People should be able to spend their money any way they want, legal or not, smart or dumb, big or small.

                          So you're saying that the government doesn't have to make it legal, but people should be able to spend their money on heroin and kiddie porn?

                          Actually, from what I see in the news I'm pretty sure that people already are able to do that.

                            maximumfun's avatar - Lottery-030.jpg
                            Lavender Rocket

                            United States
                            Member #124616
                            March 16, 2012
                            2642 Posts
                            Offline
                            Posted: November 16, 2015, 2:08 am - IP Logged

                            Last week tonight w/ John Oliver (hbo) did a piece on this as well.  I really had no idea what was brewing.