Schneiderman, FanDuel and DraftKings head to court

Attorney General Eric T. Schneiderman and the top fantasy sports companies in the nation will commence a round of high-stakes poker in a Manhattan courtroom Wednesday afternoon.

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. Further, he has asked state Supreme Court Justice Manuel Mendez to issue an injunction shutting down the two companies immediately.

The hearing is slated to begin at noon in Manhattan.

Though it is unlikely Mendez would grant an injunction swiftly, DraftKings has said it would consider an immediate appeal because a shutdown, even a short one, could "irreparably" damage its business.

New York-based FanDuel temporarily has blocked New Yorkers from participating in its games while the case is under way, citing Schneiderman's pressuring of its payment processors. In contrast, Boston-based DraftKings hasn't halted New York operations because it secured a restraining order from a Massachusetts judge that orders payment processors to continue working with it.

At issue is whether daily fantasy sports is considered illegal gambling under state law. To reach that answer, the court might first have to decide how much of the activity is skill and how much is chance.

The companies maintain that daily fantasy sports are "predominantly" games of skill and, therefore, legal.

"It's not a question as to whether this is gambling in a colloquial sense . . . but a question of whether it is unlawful gambling," DraftKings lawyer David Boies recently told reporters in a conference call.

"We maintain, unequivocally, that FanDuel has always complied with state and federal law," FanDuel has said in a statement on its website.

But Schneiderman contends that state law considers illegal any wagering that involves chance to a "material degree" (Wagering, that is, that isn't sanctioned by the state constitution, such as the lottery, horse racing and state- and Indian-run casinos).

The Democrat has called daily fantasy sports "nothing more than a rebranding of sports betting" and "plainly illegal."

Daily fantasy sports businesses are under fire elsewhere. Several states have banned them, including Nevada in October. In Massachusetts, the attorney general has proposed new regulations governing fantasy sports.

But the stakes are bigger in New York -- which reportedly has more fantasy sports players than any other state, roughly 1.1 million.

The fight already has had an impact on FanDuel, which has seen entries decline 17 percent since Schneiderman began his effort to shut it down, according to Reuters.