DraftKings, FanDuel Reach Settlement in Major NY DFS Case

The two largest DFS (daily fantasy sports) sites, DraftKings and FanDuel, and the New York State Office of the Attorney General have announced a settlement which will end the majority of the state’s felony and misdemeanor prosecutions against the DFS giants.  In exchange, DraftKings and FanDuel will voluntarily cease operations in the US’s second-most populous state until such time as DFS is expressly made legal by the state’s legislature, which is set to consider pending bills this summer.

Seal of New YorkLast fall the two sites, which dominate the US’s fledgling DFS industry, were charged with a litany of anti-gambling and consumer-fraud charges by the office of NY Attorney Eric T. Schneiderman.  Those allegations included these charges, among others:

  • Ongoing violations of the New York State Constitution (Article 1, Section 9, related to gambling matters);
  • Ongoing violations of New York Penal Law (multiple counts);
  • Repeated and Persistent Fraudulent Conduct;
  • Violations of New York’s Business Corporation Law;
  • Violations of New York’s General Business Law;
  • Charges of False and Misleading Advertising.

Under the agreement, all the charges except the false and misleading advertising counts will be dropped against the two firms, both of whom are quickly establishing a process through which New York DFS players can withdraw their balances from the two sites.  An ongoing appeal brought by the two sites against the NY AG’s office will still be heard this summer, but will now likely be constrained to the false-advertising charges.

Schneiderman’s AG office, DraftKings and FanDuel have all issued statements regarding the settlement.  According to AG Schneiderman, “I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter. As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. Today’s agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”

DraftKings issued the following statement:

Effective today, as part of a settlement reached with the Attorney General’s office, DraftKings will stop offering paid daily fantasy sports contests in New York State.

We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.

The company will not be commenting further at this time.

Over at FanDuel, which coincidentally is headquarted in New York State, the company issued a slightly longer statement which is partially directed to its NY players, which make up an oversized portion of the site’s customer base.  Per FanDuel:

We are announcing that as of today, FanDuel will cease offering paid contests in the state of New York per the terms of a settlement reached with the Attorney General on certain aspects of the ongoing litigation.

New York is a critical state for FanDuel. FanDuel is headquartered in Manhattan, where we employ more than 170 young, smart, passionate fans who are committed to innovating and providing the best fantasy experience possible. We are proud to be one of New York’s largest startup companies, and 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, the fantasy industry and our players while we continue to pursue legal clarity in New York.

This means the following for you:

– New York is a restricted state and users located in the state will not be able to deposit funds or enter paid contests.

– Users can withdraw their funds at anytime, as has always been the case.

– All contests that are already live and active will continue as planned.

– Please visit [link to FanDuel-sponsored site fantasysportsforall.com] to contact your government officials about fantasy sports and make sure your voice is heard.

Thank you for your continued support.

NY AG Schneiderman was also conducted a press conference on the settlement, which was ongoing at last report.

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