As of Monday, DraftKings and FanDuel have stopped taking bets in New York as part of an agreement with state attorney general Eric Schneiderman, who had accused them of illegal gambling. A decision by an appellate court on the legality of these games is pending.
A little background: New York Supreme Court Justice Manuel J. Mendez granted Schneiderman’s request for a temporary injunction in December, but a panel of appellate judges is reviewing the decision. DraftKings and FanDuel, meanwhile, are lobbying lawmakers – both in New York and other states – to legalize daily fantasy sports as long as they follow state regulations.
What in the world is going on here?
“Well, a judge, an appeals judge, said (that daily fantasy sports companies) can continue operating while their appeal is being decided in this lawsuit against Schneiderman, and they decided to go sit down at the table and make a deal with Schneiderman,” legal analyst Amy Dardashtian explained on CBS Sports Radio’s Ferrall on the Bench. “So the deal is they’ve decided they’re going to take the financial hit in the short term and they’re going to voluntarily stop, even thought the law is on their side. Over the past few months, those two companies, DraftKings and Fan Duel, have been working in other states with legislators to regulate and legalize daily fantasy sports and now they are doing it in New York. There are several bills already in the legislature and there’s even one in the senate and there’s some money in the senate budget to legalize and regulate fantasy sports. So the deal, the unspoken deal, is that they’re going to hold off until September.”
There is, however, more to this than meets the eye.
“I’m guessing they have some assurances from Schneiderman that it’s going to be regulated and legalized,” Dardashtian said. “Therefore, New York and the politicians can get a piece of the pie because it’s a billion-dollar industry, and then everybody wins and Schneiderman drops the suit and it’s legal and regulated. But in the short term, they have to make it look like Schneiderman is the hero and like he has won and he’s enforced the laws. So they’re backing down right now because they want to work with the system instead of (being tied down by it). . . . The bottom line is that New York wants some money from this and they want to be in charge of how DFS can play out and what people can do and can’t do. They want to regulate it.”