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State AG Wants New Yorkers' Money Back From Daily Fantasy Sites

By Christopher Coble, Esq. | Last updated on

New York Attorney General Eric Schneiderman upped the ante in the state's battle against daily fantasy sites DraftKings and FanDuel. The state filed an amended lawsuit against the companies, asking for restitution of all profits made from New York consumers as well as a $5,000 per case civil penalty.

Schneiderman told Reuters the filing is based on "a determination by the State Supreme Court that DraftKings and FanDuel have been running illegal sports betting operations [and] seeks appropriate fines and restitution from the companies." Estimates place the amount New Yorkers bet on the two sites in the ballpark of $200 million in 2015 alone.

Going All In

Originally, Schneiderman tried to block DraftKings and FanDuel from taking any more bets from New York residents. While the AG was able to get a preliminary injunction against the sites on December 11, that injunction was put on hold until today, when the two sides will appear in front of a New York appellate court. The court's decision will hinge on whether or not daily fantasy sites are considered gambling under New York gambling laws.

So You're Saying There's a Chance

The state's gambling statutes prohibit staking or risking "something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome." The statute further defines a "contest of chance" as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein."

You Bet Your Ads

DraftKings counsel David Boies contends "the Attorney General's office still does not understand fantasy sports." Both DraftKings and FanDuel claim that fantasy sports are a game of skill rather than a game of chance under New York law. While it's debatable whether the points earned by athletes for their fantasy owners are a matter of skill or chance, Schneiderman isn't betting the farm on that distinction alone. The AG is also accusing the sites of false advertising for misrepresenting the amount its users win and lose. And he's hoping to parlay that into big winnings for New Yorkers who've lost their daily fantasy bets.

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