New York AG Going Even Harder After DraftKings, FanDuel
It looks like New York Attorney General Eric Schneiderman has three-bet daily fantasy sports (DFS) leaders DraftKings and FanDuel and is putting their tournament lives at risk. Less than two months after filing numerous complaints against the two companies, including charges of illegal gambling and advertising fraud, the AG has amended the complaint in an effort to totally bury the DFS sites.
In the amended complaint, Schneiderman is going for the jugular, seeking the return of all funds wagered by New York customers of DraftKings and FanDuel (something, in this writer’s opinion, that only the most weasely customers would want) PLUS punitive damages of as much as $5,000 per player.
DraftKings has said it has around 375,000 customers and ESPN has reported that both sites have about 600,000 combined, so the punitive damages would amount to around $3 billion. Thus, if Schneiderman gets his way, not only would DraftKings and FanDuel have to bolt New York, but they would probably cease to operate altogether. That worst-case scenario sum of money would almost surely sink the ships.
Both companies issued public statements in regards to the amended complaint. First, DraftKings, courtesy of the site’s lead counsel, David Boies:
Our arguments remain strong and we are confident in our appeal for four simple reasons:
1. The Attorney General has still offered no evidence that supports a preliminary injunction.
2. Daily fantasy sports contests are not gambling — their outcome is controlled by the knowledge and skill of DFS players — that’s how you win or lose.
3. The only difference between a daily and a season-long fantasy contest is how long it lasts and the Attorney General has said that season-long fantasy sports contests are lawful.
4. It is legal for skills-based contests to charge entry fees and award prizes to participating contestants. A DFS player exercises “control and influence” over whether they win a prize by their choice of a roster which is without a doubt a skills-based exercise.
FanDuel posted its response on its website and, as has been the case with many of the company’s statements, it tries to appeal to the emotion of fantasy players:
As we have previously iterated, FanDuel remains committed to offering our fantasy contests to the Yankees, Mets, Jets, Giants, Bills, Knicks, Nets, Rangers, Islanders and Sabres fans that comprise the great state of New York and love fantasy sports – be it season-long or daily. As one of New York’s fastest growing startup companies we are thoroughly disappointed in the Attorney General’s ongoing actions and will fight this meritless, amended suit until fantasy sports are safeguarded for all sports fans.
Both DraftKings and FanDuel continue to operate in New York, thanks in large part to a stay granted by New York appellate Judge Paul Feinman after New York Supreme Court Judge Manuel J. Mendez granted Eric Schneiderman an injunction to prevent the sites from operating in the state. DraftKings had decided not to budge at any point in this battle, though FanDuel temporarily stopped operating in New York. When given the stay, FanDuel revved up again and resumed taking action from New Yorkers.
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