DraftKings, FanDuel Legal Scandal Update: No More Fantasy Sports Bets In New York, Attorney General Says

The country's two most popular fantasy sports companies are no longer legally permitted to accept bets in the state of New York, the state attorney general ruled. Attorney General Eric Schneiderman issued the order Tuesday evening to DraftKings and FanDuel and alleged that both companies facilitated illegal gambling, the New York Times reported.

DraftKings responded soon after news of the betting ban broke, with a company representative expressing dismay at Schneiderman's order:

“We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love.

“We continue to see a number of other officials, including Senator Negron in Florida, Representative Zalewski in Illinois and the Federal Trade Commission, take a reasoned, informed and measured approach to the daily fantasy sports business. We hope this trend continues along with due consideration for over 56 million sports fans across the country who enjoy playing fantasy sports. We remain committed to working with all relevant authorities to ensure that our industry operates in a manner that is transparent and fair for all consumers.

“New York’s actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers.”

Both DraftKings and FanDuel came under heavy scrutiny last month after an employee of DraftKings divulged classified customer information while winning $350,000 from a FanDuel fantasy NFL contest. As a result, the FBI and the U.S. Department of Justice both opened investigations into each companies' operations. Online fantasy sports companies have operated legally because of a law that exempts fantasy sports companies from online betting regulations.

Schneiderman opened an investigation into the companies' dealings in-state in early October.