New York attorney general Eric Schneiderman sent cease-and-desist letters to DraftKings and FanDuel on Tuesday, declaring daily fantasy sports are illegal gambling services and shouldn’t be allowed to operate in the state.
The letter, obtained by ESPN, calls for both operators to stop accepting wagers from New York residents.
“Fantasy sports is a game of skill and legal under New York State law.”
Schneiderman has given the operators five days to reply to the letter, and he will listen to their arguments. After the five-day period, if Schneiderman doesn’t change his opinion, he will pursue a cease-and-desist order, which could make both operators illegal in the state.
FanDuel and DraftKings have both responded with statements on the cease-and-desist letter, urging users to send letters to representatives.
“Fantasy sports is a game of skill and legal under New York State law,” said FanDuel in a statement. “This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, coworkers, and players across the country … We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General’s mind.”
DraftKings seconded the statement.
“We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill,” said DraftKings in a statement. “We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.”
New York is an extremely valuable market for FanDuel and DraftKings, potentially the biggest in the United States. In the past year alone, both operators have made multi-million dollar advertising deals with organizations in New York, featured at Madison Square Garden’s, the New York Jets’, and the New York Knicks’ stadiums.
Business operations in the state will remain legal, even if the services are banned. FanDuel recently bought a 45,000 square foot office in New York, and DraftKings has a satellite office. The operators have not said if they will relocate if New York decides to ban the services.
Schneiderman wrote that he is “concerned to learn from health and gambling experts that daily fantasy sports appears to be creating the same public health and economic problems associated with gambling, particularly for populations prone to gambling addiction and individuals who are unprepared to sustain losses lured by the promise of easy money.”
This is just the latest in the battle to keep daily fantasy sports services running in America. Nevada joined Arizona, Iowa, Louisiana, Montana, and Washington earlier this year, declaring that daily fantasy sports sites would have to obtain a gambling license to operate in the state.