Judge rules to shut down Draftkings, Fanduel in New York

New York Supreme Court Justice Manuel Mendez on Friday granted a preliminary injunction to Attorney General Eric Schneiderman to stop daily fantasy sports sites Draftkings and Fanduel from doing business in the state.

Mendez sided with Schneiderman in ruling that Draftkings and Fanduel are operating illegal gambling websites based on how the laws on illegal gambling are written in New York. The DFS sites had argued that they were collecting entry fees and not taking wagers, which they said does not constitute gambling.

“New York State penal law does not refer to ‘wagering’ or ‘betting,’ rather it states that a person, ‘risks something of value,'” Mendez wrote in his ruling, per Darren Rovell of ESPN.com. “The payment of an ‘entry fee’ as high as $10,600 on one or more contests daily could certainly be deemed risking ‘something of value.'”

As Rovell notes, the popular argument that DFS is a “game of skill” as opposed to gambling was not relevant to Mendez’s decision, as that is not the measuring stick for illegal gambling in the state of New York.

At least 600,000 New Yorkers were playing daily fantasy sports on Fanduel and Draftkings, and they accounted for roughly $200 million in entry fees this year. New York residents have not been permitted to enter paid contests since Schneiderman sent cease-and-desist letters to Draftkings and Fanduel on Nov. 10.

Earlier this week, the New York Assembly held a hearing to discuss the potential regulation of daily fantasy sports. Assemblyman J. Gary Pretlow, the head of the Committee on Racing and Wagering, believes that future legislation will legalize and regulate daily fantasy sports.

The bottom line here is that states want to regulate and tax DFS, which has quickly become a billion-dollar industry. As the rally in New York last month showed us, people love Draftkings and Fanduel. Government wants a piece of the pie.