DraftKings and FanDuel Agree to Stop Paid Contests in New York

A major change has been made in the New York world of fantasy sports. New York Attorney General Eric Schneiderman made an agreement with DraftKings and FanDuel in which the companies agree to immediately stop operating paid contests in New York.

In November, Schneiderman sent cease and desist letters to the fantasy sports companies alleging the contests are games of chance and constitute illegal gambling under New York law. A preliminary injunction was granted against the companies in December; however, an immediate appeal stayed the injunction  and allowed the companies to continue operating in New York.

On March 9, 2016, the fantasy sports companies urged a New York court to halt all lower court proceedings until an appeal in the First Department is decided because it will resolve crucial issues in the case, such as the nature of New York’s gambling statutes.

Although the appeal has yet to be decided, the fantasy sports companies agree to stop operating in New York. In exchange, Schneiderman agrees stop pursing the underlying litigation until an appeal hearing is held in September, which if successful, would cause the fantasy sports companies to pay restitution to losing participants in the fantasy sports games. However, should any state legislation legalizing fantasy sports occur in the meantime, it would resolve the litigation and there would be no need for a hearing.

After the announcement of this agreement, Schneiderman said it is his “job to enforce the law, and starting today, DraftKings and FanDuel will abide by it.”

Although the companies can no longer operate in New York, DrafKings seems optimistic in New York’s legalization of fantasy sport in its statement that it “will continue to work with state lawmakers to enact fantasy sports so that New Yorkers can play the fantasy games they love.”

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