Risk & Compliance

DraftKings and FanDuel to Stop Paid Contests in N.Y.

"Our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue,” said the N.Y. AG.
Katie Kuehner-HebertMarch 22, 2016

Fantasy football operators DraftKings and FanDuel will stop paid contests in the state of New York and will delay until September their appeal of the state attorney general’s order to shut down the companies’ operations.

The announcement of the agreement was made by New York Attorney General Eric Schneiderman, who last year issued the cease-and-desist order on the two firms’ operations, claiming their contests rely on chance and are illegal under state law.

The agreement “also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division,” Schneiderman said in a press release. “Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”

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The attorney general’s order could also be lifted before the companies’ September appeal if state lawmakers pass legislation explicitly allowing and regulating paid daily fantasy sports, according to CNBC. The daily fantasy industry has been lobbying hard for lawmakers to do so, even if it comes with new regulations being imposed on the industry.

DraftKings emailed a statement to CNBC that the firm would “continue to work with state lawmakers to enact fantasy sports legislation.”

Meanwhile, the attorney general’s crackdown to stop paid contests in the state is “disheartening,” a FanDuel spokesperson told CNBC.