FanDuel blocks NY players after attorney general files lawsuit

The daily fantasy sports website FanDuel will no longer allow players from New York to enter its contests after the state attorney general filed suit against the company and competitor DraftKings.

FanDuel said it is “temporarily suspending entry in paid contests for people located in New York,” in a statement on Tuesday.

“We believe that this restriction is temporary and we hope to be able to offer our paid contests to New Yorkers again very soon,” the company added.

Users who entered a contest before 2:30 p.m. on Tuesday will be able to play, according to the company. All users can also still withdraw their funds from the platform.

FanDuel stopped taking deposits from New York players last Friday when they first received a cease-and-desist letter from the attorney general, but the contests continued until Tuesday afternoon. The company said the restrictions on deposits from New Yorkers would remain in place.

DraftKings seemed to remain open for business for New York-based users as of Tuesday afternoon.

“To be clear: Your right to play DFS in New York will remain unchanged unless a New York court decides otherwise,” the company said in an email to users.

{mosads}The companies’ moves come after the state’s attorney general filed a lawsuit on Tuesday to stop DraftKings and FanDuel, the two dominant websites in the booming fantasy sports industry, from doing business.

Attorney General Eric Schneiderman argued that they are gambling operations and violate state gambling law. He asked a judge to issue a preliminary injunction blocking betting on the platforms in the state.

The complaint cites statements from an investment research firm and the company’s efforts to recruit gamblers as players to back his charge that the websites are gambling operations.

“FanDuel runs a casino-style gambling operation—dubbed daily fantasy sports (‘DFS’)—where bettors can wager upwards of $10,000 per ‘line-up’ and enter for a chance to win jackpots of up to $1 million,” the complaint against the company said.

The attorney general also alleged that the companies mislead consumers with multi-million dollar ad blitzes where customers boast of winning big jackpots.

“DraftKings uses advertisements to lure New York residents with promises of easy riches for a lucky few sports fans,” the office said in its complaint filed against the Boston-based company.

The complaint alleges that daily fantasy sports have also become a danger for compulsive gamblers. The filing says that daily fantasy sports “is an especially powerful draw for young males who are increasingly seeking help for compulsive gambling related to DFS with counselors and appearing at Gamblers Anonymous meetings.”

Both companies pushed back against the attorney general’s complaints in statements on Tuesday, and claim they are only games of chance not gambling.

“FanDuel has always complied with state and federal law and we are going to continue to fight to ensure millions of New Yorkers have the right to play the fantasy sports games they love. We look forward to the court vindicating our position next week,” a company spokesperson said.

A DraftKings spokesperson said that it believes “the Attorney General’s view of this issue is based on an incomplete understanding of the facts about how our business operates and a fundamental misinterpretation and misapplication of the law.”

The complaints came less than 24 hours after a judge declined to grant the companies’ requests for a temporary restraining order blocking Schneiderman from taking action.

The websites have also challenged Schneiderman’s initial cease-and-desist letters in court. An early hearing in the case is expected to come next week.

The battle in New York is a particularly prominent example of the regulatory fight over the future of daily fantasy sports. In Washington, several lawmakers have called for congressional hearings on the issue and the Department of Justice is reportedly investigating the companies.

This story was updated at 3:51 p.m.