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Things are getting ugly in New York for daily fantasy sports.
Industry leaders DraftKings and FanDuel have both separately filed suit against New York Attorney General Eric Schneiderman. The lawsuits come just two days after Schneiderman and his office declared that daily fantasy sports, a business in which people win cash prizes in fantasy sports tournaments, was gambling and therefore illegal under New York State law.
Schneiderman sent both companies cease and desist letters Wednesday. Now the companies are asking the New York Supreme Court to throw those letters out so they can continue operating in the state.
“Today, we have taken decisive legal action to prevent a unilateral, misinformed and legally misguided attempt by the New York Attorney General to act as ‘judge, jury and executioner’ for daily fantasy sports in New York,” a DraftKings spokesperson wrote in a statement. “We are asking the New York Supreme Court to rule that the Attorney General’s cease-and-desist letter is unconstitutional, an abuse of discretion, and simply wrong.”
The issue is whether or not daily fantasy sports qualifies as gambling and therefore should be regulated as such (or in the case of many states like New York, banned). DraftKings and FanDuel have long argued that daily fantasy is a game of skill, not chance, and should therefore be legal. Regulators clearly aren’t as convinced.
Here’s a statement from Schneiderman’s office that was sent to Re/code.
“The Attorney General’s job is to enforce New York State law, and the law here is clear. Online sports gambling sites are illegal in New York. DraftKings and FanDuel are operating illegal sports betting websites under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling. As a result, our office issued a cease and desist letter to stop them from violating state law by accepting bets from people in New York. Because both companies have refused to follow the law in our state, we will take action to enforce state law.”
The battle between regulators and the top two daily fantasy businesses has ractheted way up in the past 48 hours. Both DraftKings and FanDuel were already dealing with gambling regulators in Nevada, but Schneiderman’s ruling has generated a lot of buzz and animosity. Supporters of the industry, many of whom were reportedly DraftKings and FanDuel employees, protested outside Schneiderman’s office Friday morning in Manhattan.
It’s not the first time Schneiderman has been under attack from young, disruptive tech companies. He has also fought ride-sharing companies like Uber and Lyft on regulatory issues, as well as Airbnb.
You can read the filings for yourself below:
normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> DraftKings v Schneiderman
This article originally appeared on Recode.net.
