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Fantasy Sports Companies Deemed Illegal by NY Attorney General

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Scandals in gambling are not unheard of, but when large companies and sports get involved, then the public will naturally want some answers. DraftKings and FanDuel are companies of online fantasy sports, which is any sports competition in which participants manage imaginary teams that are based off of real-life statistics of the player and professional sport. Up until recently, these games were gambled and bet upon. New York Attorney General Eric Schneiderman sent a cease-and-desist letter to stop any illegal activity during November to the billion-dollar companies. The statement issued was based on the law that declares that fantasy sports are only legal if they are based on skill. They become illegal when the game becomes based on pure chance instead.

The Attorney General of New York had been engaged in a month-long investigation into online daily fantasy sports when he declared there to be illegal gambling in his state and ordered for the companies to stop accepting wagers from the residents of New York. The sites were given five days to reply and give Schneiderman a reason not to push his case of cease-and-desist orders. In the past, to assert their legality, the sites have referenced the Unlawful Internet Gambling Enforcement Act of 2006 in face of their rapid growth, claiming that their games are based on skill. But now, when under the spotlight, both companies have released statements to the public, in a way, brushing off Schneiderman’s threats.

“We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General’s mind,” a portion of FanDuel’s statement said.

DraftKings’ released statement was similar, claiming that Schneiderman did not take the time to understand their business and that they are “disappointed” in the attorney general.

Previously, the large companies had not been under any scrutiny, but recently, TV networks have been flooded with numerous advertisements, bringing their sites to the public’s eye. In addition to this, many were surprised when Ethan Haskell, a DraftKings employee, came in second place in an NFL contest on FanDuel, winning $350,000. Although a third party investigation stated that Haskell did not have access to pick a known winning lineup, it was still a surprise to many that employees were allowed to play. Both companies have since banned employees from competing; however, many were still unsatisfied and suspicious of the companies. Within the month of November alone, 34 lawsuits have been filed against the sites in 13 different states, 12 of which were from New York. These individuals claim that they were cheated on and that the game depended merely upon chance.

The Assembly’s Committee on Governmental Organization has scheduled a hearing this month in California, and a bill has been proposed by Committee Chairman Adam Gray that would require licensing and regulation of the sites and businesses through the California Gambling Control Commission. In New York, the case was taken to the Supreme Court during November. The companies’ lawyers argued that their games were not gambling, but Schneiderman’s office countered that they were based on luck, not skill, so a decision is expected this month.

Today, six states, not yet including New York, have prohibited fantasy sports for money, others have even prohibited some forms of the daily online game, but all of the states have made various choices and court decisions on the legality and eligibility of online fantasy sports sites.

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Fantasy Sports Companies Deemed Illegal by NY Attorney General