Looks like the luck’s run out on daily fantasy leagues. On Tuesday, New York Attorney General Eric T. Schneiderman ordered fantasy sports giants DraftKings and FanDuel to stop accepting bets from New York residents.
Schneiderman issued a cease-and-desist order in an attempt to stop the companies from collecting cash in what he referred to as, “a massive multibillion-dollar scheme intended to evade the law and fleece sports fans across the country.”
A 2006 federal law exempted fantasy sports leagues from prohibition against processing online betting, which is what helped FanDuel and DraftKings skate a fine line of legality for so long. The basis of the law claims that unlike gambling, fantasy leagues require skill to select rosters based on a deep understanding of statistics and player skill.
But the New York attorney general isn’t buying it. Schneiderman says now that the companies have awarded more than $3 billion in combined prizes, it’s become clear people are “placing bets on events outside their control of influence, specifically on the real game performance of professional athletes.”
FanDuel and DraftKings have five days to respond to Schneiderman’s letter to appeal his order.
This isn’t the first time the companies have faced legal woes because of their business model. Last month, the Nevada Gaming Control Board and state attorney general ruled that daily fantasy leagues meet the definition of sports gambling and would need a license to continue operating within the state. Since the ruling, both companies stopped accepting bets from Nevada.