FanDuel and DraftKings Reach Settlement with New York Attorney General

FanDuel and DraftKings Reach Settlement with New York Attorney General

FanDuel and DraftKings Reach Settlement with New York Attorney General

After months of legal drama, the two biggest sites in the daily fantasy sports industry have finally reached a settlement with the Attorney General of New York, Eric Schneiderman. It was the office of the AG that officially announced this news, confirming that FanDuel and DraftKings would no longer be able to operate in the state of New York.

The two websites released their own statements to clarify matters, stating that their operations in the state would be ceasing, at least until the month of September. At that time, an appeal will be held regarding the legality of DFS games and the sites may be able to subsequently resume their operations. This news comes as quite a blow to the ever-growing DFS industry and to fans of fantasy games who currently live in the state of New York.

fanduel and draftkings

Details of the Settlement

From the moment the announcement was made, both DraftKings and FanDuel revealed that they would immediately prevent NY-based players from joining up with any new contests. The settlement itself comes with its own range of conditions. On June 30th, the Senate and Assembly are scheduled to adjourn regarding the legality of DFS games.

If DFS is legalized at this time, the lawsuits taking place between the sites and the AG will be dropped. Similarly, all lawsuits and any future appeals will also be dropped if the AG wins the appeal in September. Finally, the sites have been ordered to take the necessary steps to allow New York-based users to withdraw the full amounts of their account funds as quickly as possible.

The legality around the DFS industry’s operations in New York is currently a very complex and crowded affair. There are many different bills currently circulating around, but it’s bill number S 6793 that really stands out. This bill is being sponsored by Senator John Bonacic and could be an important document in the future legalization of DFS games. Bonacic has offered support for online poker in the state of New York in the past and has been making efforts to integrate the subject of DFS into budget discussions. The Senator made his own statement, in which he revealed that the regulation of fantasy games was high on his list of priorities.

fanduel and draftkings new york settlement summary

Waiting on Regulation

The ideas behind S 6793 include the creation of a Fantasy Sports Contests Division as part of customer protection and monetary fraud services. This would help to regulate DFS games and provide companies like DraftKings and FanDuel with official licenses to operate in the state. The companies would need to pay $500,000 and would also have a 15% tax rate on the revenue they earn from New York-based players.

The bill also includes a minimum age limit of 18 for all DFS participants, and also forbids the creation of fantasy contests based on college sports or horse races. S 6793 would also allow mean that DFS sites would no longer be associated with the gambling section of the state’s penal code.

So what does all of this mean for the sites and players concerned? Well, anyone living in New York will no longer be able to play on FanDuel or DraftKings. The sites will make use of IP identification software to block these users. However, people who live in New York would still be able to access the sites if they find themselves out of state.

The ramifications for FanDuel and DraftKings are quite sizeable. These two sites earn a lot of income from the state, with a huge number of DFS users being based in New York. Fortunately, if future proceedings turn out favorably, these sites could resume operations in time for the next NFL season.

Potential Changes to FanDuel and DraftKings’ Presence in New York

It’s also worth pointing out that both FanDuel and DraftKings are heavily invested in New York in other ways. The companies both have advertising deals with several major sports organizations around the state, with the Knicks, Rangers, Bills, Giants and Jets being just a few examples. Allegedly, this latest announcement will not influence these marketing programs in any way.

fanduel-baseball-logoIn addition, big national leagues like the NBA, MLB, and NHL—all of whom have offices in New York—have also offered their support to the DFS sites, so there are still some positive signs for FanDuel and DraftKings. As for other DFS sites, we can’t expect any of them to really stay active in New York for too long.

The story began back in October of last year when we first heard word about the AG’s plans to investigate these sites. A couple of days later, Schneiderman publicly criticized DFS sites, equating their operations to “unregulated gambling”. A month later, the AG sent cease and desist letters to the industry leaders. FanDuel and DraftKings next started taking action against the AG, as both sites demanded temporary restraining orders.

draftkings-promo-codes-logoThese orders were not granted and the AG filed for an injunction against the sites, paving the way for a court case that took place on the 25th of November. In early December, a judge of the Supreme Court ordered that FanDuel and DraftKings cease their operations. On the very same day, the injunction was stayed by a court of appeals and FanDuel resumed full operations in the state.

At that time, the DFS industry seemed to have cause for optimism. However, things have now turned out quite negatively for these companies. The AG revealed his delight at the announcement, stating that FanDuel and DraftKings needed to abide by the laws of the state. Meanwhile, the DFS sites themselves also released respective statements.

FanDuel’s statement spoke of the company’s sadness at the announcement, while adding that it represented the best thing for the industry at this time. DraftKings echoed these sentiments, emphasizing its gratitude to New York-based users and also affirming its commitment to pursuing legal regulations that will allow those users to once again enjoy the ability to take part in DFS contests in the future.

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