Judge delays decision on shuttering daily fantasy sports in NY
DraftKings lawyer David Boies leaves court in Manhattan on Tuesday, Nov. 24, 2015. Attorney General Eric T. Schneiderman has filed a lawsuit against DraftKings and FanDuel, claiming the two are conducting illegal gambling and bookmaking as defined by New York State law. Credit: John Roca
A state judge said Wednesday that he wouldn't immediately rule on a request by state Attorney General Eric T. Schneiderman to shut down daily fantasy sports in New York, though he said he would soon.
Lawyers for DraftKings and FanDuel, the two biggest fantasy sports companies in the nation, had urged Supreme Court Justice Manuel Mendez to deny the injunction, saying it would “destroy” their businesses.
Before adjourning on Thanksgiving Eve, Mendez said he would reach a decision "very soon" - which means daily fantasy sports can, for now, continue to operate in New York.
Schneiderman, a Democrat, contends that state law outlaws any wagering that contains a “material degree” of chance and, therefore, daily fantasy sports are "plainly illegal." The Democrat wants an injunction immediately shutting down New York-based FanDuel and Boston-based DraftKings — which control about 95 percent of the daily fantasy sports market — in New York. Schneiderman also has filed a civil lawsuit against the two companies.
The opposing sides squared off in a courtroom for the first time Wednesday, spending much of the early proceedings debating the amount of skill and chance involved in the games, while comparing the leagues to poker, horse-racing and fishing tournaments.
“Chance is so inherent in the game it's the dominant factor,” said Kathleen McGee, an assistant attorney general. “What Draft Kings and FanDuel really offer is a way to bet on sports ... any way you look at it, DraftKings and FanDuel are providing illegal gambling.”
McGee said FanDuel and DraftKings were no different from "handicappers" that have been involved with gambling for years.
FanDuel lawyer John Kiernan contended: "Fantasy sports are essentially games of skill” where "aptitude and effort" significantly impact the outcome.
DraftKings lawyer David Boies, a well-known litigator who represented Al Gore in the 2000 presidential election, told Mendez that an injunction would “destroy” the companies.
The stakes are especially high in New York — it has more daily fantasy sports players than any other state, with 1.1 million, according to Eilers Research.
Boies said Schneiderman “can’t have it both ways” by maintaining that season-long fantasy sports leagues are legal but daily competition is not.
In response to the lawsuit, FanDuel has blocked any New York residents from participating, citing pressure Schneiderman has applied to its payment processors. DraftKings, in contrast, continues to operate here because it successfully sought an injunction ordering payment processors to keep working with the company amid the dispute.
