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Fantasy Sports Betting Drama: DraftKings & FanDuel Strike Back


Sportsbook Review reported earlier this week that New York Attorney General Eric Schneiderman issued a cease-and-desist order to fantasy sports betting websites DraftKings and FanDuel.

Schneiderman contended that DraftKings and FanDuel's games are considered illegal gambling and are in violation of New York law, and ordered each of the sites to stop accepting business from customers based in the Big Apple.

The two daily fantasy betting companies are not taking the AG's blow sitting down, and have each filed a lawsuit today in NY's Supreme Court out of Manhattan.

DraftKings and FanDuel's legal teams have taken Schneiderman to task on his interpretation that their businesses should be considered games of chance, as opposed to skill, which would suggest that they be categorized as an illegal gambling business under the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

There is a specific carve-out in the UIGEA for fantasy wagering as a game of skill, which has up until now allowed the daily fantasy sites to blanket American football broadcasts with their pesky advertisements. DraftKings is even the official fantasy sponsor of Major League Baseball.

DraftKings and FanDuel also have taken issue with the Schneiderman going after their payment processors; one such processor, Vantil, ceased processing transactions for DraftKings consequently, according to a report at ESPN.

"DraftKings and FanDuel are operating illegal sports betting websites under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling," said Schneiderman.

For now, both companies continue to serve their NY customers, and Sportsbook Review was able to successfully create a test account with registration set to NY on DraftKings.

Upside for Traditional Sports Bettors
There are Walter White style containers of cash backing fantasy and these funds are not buried in a desert somewhere, with the MLB, NBA, NASCAR, NFL, and TV networks doing business with DFS. Additionally, the obvious evidence that the average Joe has a possibly worse than  50% chance of turning a profit means that the line on what is a game of skill or luck has blurred dramatically, such that if fantasy sports betting is allowed federally or at the state level, traditional sportsbooks ought to be, too.

Sportsbook Review interviewed New Jersey State Senator Raymond Lesniak on this very subject last month and Lesniak quipped that "it's a distinction without a difference", referring to fantasy sports betting vs. straight up sportsbook betting. Lesniak has led the charge for sports betting to be made legal in New Jersey, and the state will likely use the proliferation of an unregulated fantasy industry to make its argument that legal, licensed, and above board sportsbooks should be permitted to operate in Atlantic City casinos, just as sportsbooks are allowed to operate in Nevada [thanks to outdated federal legislation PASPA].

Sportsbook Review will keep readers posted on the status of the fantasy sports betting vs. New York proceedings.