New York Attorney General Eric T. Schneiderman ordered daily fantasy-sports betting websites DraftKings and FanDuel to stop accepting bets in New York, according to the New York Times.
“Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under New York law,” Schneiderman wrote in a letter, according to ESPN’s David Purdum and Darren Rovell, and ABC News.
The decision comes a little over a month after Schneiderman opened an investigation into the websites. The investigation was prompted by reports that employees at both companies had won major payouts betting on each other’s platforms.
Representatives of DraftKings and FanDuel lambasted the decision and are trying to rally their large fanbases against the ban.
DraftKings sent out an email to players saying, “Hey, New York, protect your right to keep playing daily fantasy sports. Contact the attorney general today!”
In a statement, FanDuel said:
Fantasy sports is a game of skill and legal under New York State law … 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. The game has been played — legally — in New York for years and years, but after the Attorney General realised he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal. We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General’s mind.
According to a statement obtained by ESPN, Schneiderman said:
Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers … Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.
Losing New York would be a huge deal for both companies. According to ESPN and industry research firm Eilers Research, there are more daily fantasy players in New York than any other state.
The daily fantasy scandal broke last month after a user on a fantasy-sports forum noticed that DraftKings employee Ethan Haskell admitted to “inadvertently releasing data before the start of the third week of NFL games.”
That data could have given Haskell or other users a significant edge in DraftKings contests, which have considerable payouts. Haskell won $US350,000 at FanDuel the same week.
Schneiderman wrote a different letter to both companies in October, demanding the name, job titles, and descriptions of any employees responsible for compiling the wide range of data used to determine the value of players.
Because bettors select a hypothetical roster of players based on player valuations determined by the sites, Schneiderman believes that knowledge of the data used to determine the valuations of players can be used as an unfair advantage.
The Times says Schneiderman also demanded that DraftKings and FanDuel turn over details of any current internal investigations into their own employees, including Haskell.
Both companies said they had investigated Haskell and cleared him of wrongdoing.
The reports have raised doubts as to what information employees at sites like DraftKings and FanDuel have access to and if they are using that data to win money at other sites.
ESPN’s “Outside the Lines,” reporter Darren Rovell found that DraftKings employees had won o.3% of all the money ever awarded by rival site FanDuel, which totals approximately $US6 million of the nearly $US2 billion paid out by the site.
“It’s something we’re taking a look at — fraud is fraud,” Schneiderman said in a radio interview last month before the inquiry was announced, The Times reports. “And, consumers of any product, whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can’t commit fraud.”
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