NEW YORK (CBSNewYork/AP) — Fantasy sports sites DraftKings and FanDuel asked a New York state court on Monday to allow them to continue operating in the state, as they appeal a lower court judge’s order to stop.
In court papers filed in the State Supreme Court Appellate Division in Manhattan, the companies argued their businesses would suffer greatly if they were forced to prevent customers from playing fantasy before the case worked its way through the appeals process.
A lower court judge barred the companies from operating last month, siding with the state Attorney General Eric Schneiderman who has likened their businesses to illegal gambling operations. Schneiderman first filed a lawsuit in November and was granted a temporary injunction on Dec. 11 to stop FanDuel and DraftKings from operating within the state.
But after the companies appealed, but that decision an appellate judge stayed that order until the full panel of appellate judges could consider it.
Fantasy sports “have been offered openly, honestly, and permissibly in New York for nearly a decade; and if the NYAG had actual evidence that they caused public harm, he would have identified it in his brief,” wrote DraftKings attorney Randy Mastro wrote in a filing. “There is none.”
The full panel could rule on whether the companies can operate amid the appeals process in as few as two weeks, during the middle of the NFL football playoffs.
The companies argue their games are based on skill, not chance, and players pay entry fees in order to manage rosters like a general manager. But Schneiderman has countered that the games are highly dependent on factors out of their control — such as injuries or even the weather — and are thus ultimately based on chance.
“Like a sports bettor, a DFS player makes a wager that pays out depending on the performance of athletes on the field — events over which DFS players, like sports bettors, have no influence or control,” an assistant attorney general wrote in a memo to the appellate court submitted last week.
This past Thursday, Schneiderman filed a new lawsuit asking DraftKings and FanDuel to return the money to users who lost it during 2015 as well as pay a fine of up to $5,000 per case. The sites have said they took in more than $200 million in entry fees from at least 600,000 customers in New York state.
In the new filing, the attorney general zeroed in on user bonuses that he believes are deceptive, saying they offer hundreds of dollars in bonuses that would unlock only after users spent thousands on the site (that type of incentive advertising is a common practice in Las Vegas casinos).
Schneiderman also has argued that the companies, which both have aggressive advertising campaigns, misrepresent the chances of winning. In 2013 and 2014, only 11.7 percent of DraftKings users made money, according to the complaint.
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