On Monday, DraftKings, FanDuel, and the New York State Office of the Attorney General announced that they have reached a settlement in the legal battle over daily fantasy sports (DFS) in the Empire State. In exchange for the two DFS leaders withdrawing from the New York market until at least September, NY AG Eric Scheiderman has agreed to drop most of the charges against the two companies.
The reason September is key for DraftKings and FanDuel is because their appeal regarding the legality of DFS is scheduled to be heard that month. If the Court rules that DFS is, in fact, legal in the state, then one would assume that DraftKings and FanDuel could get right back to offering real money contests.
In the meantime, there are DFS bills circulating in the state legislature. According to the terms of the settlement, if one or more of the bills pass by the time the Senate and Assembly adjourn on June 30th, therefore legalizing DFS, then the lawsuits/charges levied against DraftKings and FanDuel by the New York Attorney General will be dropped except for the charges of False and Misleading Advertising.
If the Attorney General Schneiderman wins the appeal in September, DraftKings and FanDuel have agreed to do away with their lawsuits and appeals. The AG will do the same, but the false advertising charges will stick.
The sites have also agreed to process withdrawal requests from customers within seven days of when the requests are made. It appears that customers of the two sites can choose to keep their funds on deposit if they wish so that they can play in real money games if they find themselves logging in from a state in which the sites are still active. The sites are permitted to host free contests and can award prizes, as long as players are not required to pay an entry fee.
FanDuel posted a statement on its website, explaining the situation. The statement reads, in part:
New York is a critical state for FanDuel. FanDuel is headquartered in Manhattan, where we employ more than 170 young, smart, passionate fans who are committed to innovating and providing the best fantasy experience possible. We are proud to be one of New York’s largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York.
DraftKings did, as well:
We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.
On the other side, Attorney General Schneiderman celebrated:
I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter. As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. 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.
