Judge Orders FanDuel And DraftKings Can Not Do Business In New York

The New York Attorney General has called daily fantasy sports “gambling.”

Scott Olson / Getty Images

FanDuel and DraftKings can not operate their businesses in the state of New York while Attorney General Eric Schneiderman's case against daily fantasy sports plays out, a New York judge ruled Friday.

Schneiderman ordered FanDuel and DraftKings to cease doing business in the state of New York in November, on the basis of illegal gambling under the guise of game playing.

It is the NYAG's contention that DFS [daily fantasy sports] played on Fanduel, Inc. and Draftkings, Inc., results in customers placing bets labeled "entrance fees" on events they cannot control or influence, relying on the real-game performance of professional athletes, to win a prize, which amounts to gambling as defined in Penal Law 225.00 [2]. The NYAG claims that the "entrance fee" is not returned in the event of a loss and because the statute only requires "something of value," not requiring that it be classified as a "bet or wager" the "entrance fee" is sufficient to establish gambling.

FanDuel and DraftKings have argued that daily fantasy sports are "games of skill," asserting that "DFS players act like general managers and rely on a team that does not exist in reality."

Both companies filed motions to operate in the state of New York while the appeals process against Schneiderman's action plays out.

Judge Manuel Mendez ruled Friday that FanDuel and Draft Kings are "enjoined and restrained from doing business in the State of New York, including accepting entry fees, wagers, or bets from New York State consumers in regards to any competition, game or contest run [...] until a final determination."

Each business will have 30 days to appeal Mendez's decision and request further injunctions to operate in the state of New York until the case is finalized.

AG Schneiderman issued a statement on the ruling Friday:

"We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law. I have said from the beginning that my job is to enforce the law; and that is what happened today."

Mendez's full ruling is below: