Updated Thursday, Nov. 12 11:06 a.m.
NEW YORK (CBSNewYork) — Could the next big FanDuel and DraftKings contest be a court fight?READ MORE: Police: Suspect Punches Man, Woman At Brooklyn Convenience Store, Steals Their Car Keys
Schneiderman said DraftKings and FanDuel’s games constitute illegal gambling.
“Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers,” the attorney general said in a statement. “Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country.”
The big question is whether daily fantasy sports contests are games of chance or games of skill.
In a statement, DraftKings responded to Schneiderman’s order saying, “fantasy sports is a game of skill and legal under New York state law.” It said it will “pursue this fight to the fullest.” FanDuel also insisted winning requires skill, adding, “We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options.”
FanDuel Chief Executive Office Nigel Eccles on Wednesday encouraged New Yorkers to keep betting.
“We’re going to use every avenue we can to stay open, but we are going to engage with the AG office,” he told WCBS 880’s Alex Silverman. “We’re going to look at other legal routes that we may want to take.”
According to industry research, more people are playing fantasy sports in New York than any other state, CBS2’s Dave Carlin reported.
On Twitter, DraftKings was linking people to a form letter to send to Gov. Andrew Cuomo and Schneiderman urging them not to shut down daily fantasy sites.
Schneiderman’s move received some backlash from New York lawmakers.
Assemblyman Dean Murray, R-East Patchogue, issued a statement criticizing the decision.
“Like many New Yorkers, I participate in DraftKings games and I enjoy playing,” he said. “I see it as entertainment and look forward each week to pitting my football knowledge against other fans. I can also assure you that playing these games takes a heck of a lot more skill than playing an instant scratch-off lottery game.READ MORE: New York Woman Indicted In Connection To Fire That Injured 4 Firefighters, Displaced 60 Residents
“If this was anything like the NFL, the AG’s error would be overturned by instant replay.”
U.S. Rep. Chris Collins, R-N.Y., tweeted to Schneiderman late Monday night saying “your decision on daily fantasy sports is another blatant grab for headlines @ the expense of New Yorker’s personal freedoms.”
Schneiderman also said advertisements by the two companies, including one from DraftKings promoting the site as “the simplest way of winning life-changing piles of cash,” misled players about their chances of winning. The top 1 percent of players, he wrote, take home most of the prizes.
“The overwhelming majority of the bettors are lured in with these ads making it look like an easy way to make money,” he said. “The overwhelming majority just lose money.”
New York is not alone in trying to stop the sites. Nevada last month declared the games gambling, which requires their operators to have state licenses. New Jersey, Pennsylvania, Massachusetts and Georgia are contemplating action as well, CBS2’s Diane Macedo reported.
One New Yorker thinks there needs to be a compromise.
“He wants to shut it down but I think it be better to get it to the point where both sides can meet see where the middle is,” Brian Radock, of Manhattan, said. “Instead of shutting them down why not work with them to generate some good out of this for the public.”
Fantasy sports allow fans to select a virtual team of real-life players and accumulate points based on their performances. The popularity of the games has exploded over the past 15 years.
While many season-long leagues are comprised of friends or co-workers who play for free or pay fees of varying amounts into a jackpot to be paid to winners, the online daily fantasy sports sites have popped up in recent years. Those sites allow paying participants to select a new team, or multiple teams, every day, and large cash prizes are awarded to the top performers.
Buy-in fees on the daily sites can range anywhere from 25 cents to $5,000.
Schneiderman drew a sharp distinction between the operations of daily fantasy sports sites and traditional fantasy leagues, which he said were legal partly because they relied on months of smart play over the course of several months. DraftKings and FanDuel contests, he wrote, are about “instant gratification” and involve no long-term strategy.MORE NEWS: Man Steals CBS2 News Vehicle In Midtown, Sideswipes Taxi
ESPN reported that New York state is not seeking to recover money from the daily leagues for players.