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DraftKings and FanDuel Pull up Stakes, Leave NY

By Christopher Coble, Esq. on March 21, 2016 | Last updated on March 21, 2019

The ongoing saga of the State of New York and its attorney general Eric Schneiderman versus DraftKings and FanDuel has been an entertaining one. Schneiderman declared the daily fantasy sites "constitute illegal gambling under New York law," ordered them to stop taking bets in the state, and then asked for New Yorkers' money back. In December, a New York Supreme Court judge issued an injunction against the companies that was later suspended by another court.

And after all that, it looks like Schneiderman has won (for now). DraftKings and FanDuel announced today that they will be suspending operations in New York, subject to a future change in the legal climate.

Taking Their Ball ...

The two sides, who have exchanged verbal barbs and legal filings for months reached two separate agreements, one for DraftKings and one for FanDuel. Under the settlements, the two sites agreed to stop taking money in New York (they can still offer free contests in the state) until the Supreme Court Appellate Division rules on the aforementioned injunction.

If the injunction is upheld, the attorney general will withdraw its claims regarding illegal gambling and not seek "restitution, disgorgement, damages, civil penalties, fines, fees, expenses or costs related to the terminated claims." The settlement agreements specifically retained the attorney general's right to pursue claims of false advertising or consumer fraud.

... And Going Home

FanDuel, which is headquartered in Manhattan, released a statement that said: "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." And DraftKings said it will "continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love."

That legislation may be in play soon. Legal Sports Report noted "a wide array of daily fantasy sports bills in play" in New York, and one in particular that would create a Fantasy Sports Contests Division and tax and regulate daily fantasy sites similarly to Virginia's new statutes. Absent clearer federal legislation on the matter, DraftKings and FanDuel are left fighting a state-by-state battle, and hoping that legislation like Virginia's can gain momentum, especially in New York.

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