DraftKings, FanDuel File Lawsuits Against New York State’s Attorney General

Legal attack follows demands that daily fantasy sports sites stop accepting “wagers” in the state, which classifies their operations as illegal gambling

DraftKings and FanDuel are refusing to go down without a fight in New York.

The daily fantasy sports sites are suing New York Attorney General Eric Schneiderman in response to his demands that they stop accepting “wagers” in the state after classifying their operations as illegal gambling.

In separate lawsuits filed in Manhattan civil court, the companies have accused Schneiderman of waging an illegal campaign against them, reported the Wall Street Journal on Friday.

The attorney general’s office issued cease-and-desist letters to the companies earlier this week that accused them of engaging in illegal gambling under state law and demanded they stop accepting wagers from New York customers.

On Tuesday, Schneiderman gave the popular sites five days to respond before possibly starting legal proceedings against them in an attempt to shut them down.

“The Attorney General’s actions constitute a shocking overreach. He has unleashed an irresponsible, irrational, and illegal campaign to destroy a legitimate industry, intending to deprive hundreds of thousands of New Yorkers of the use and enjoyment of these services,” stated the new complaint from DraftKings, which is represented by Randy Mastro of Gibson, Dunn & Crutcher LLP, obtained by the WSJ.

“Such a shutdown would deprive hundreds of thousands of subscribing New Yorkers of the opportunity to pit their skills against the skills of others in selecting a ‘fantasy’ team of athletes,” the FanDuel response read.

“[FanDuel] seeks a declaration that daily fantasy sports does not constitute illegal ‘gambling’ or ‘bookmaking’ under New York law.”

However, the attorney general stands by the original ruling. “The Attorney General’s job is to enforce New York State law, and the law here is clear,” Schneiderman said. “Because both companies have refused to follow the law in our state, we will take action to enforce state law.”

Both DraftKings and FanDuel came under fire last month amid allegations of insider trading between the sites after a DraftKings employee won $350,000 in a daily fantasy contest on FanDuel during Week 3 of the NFL season. It was suspected that he had access to data showing which football players were the hottest to own that weekend.

In the aftermath, ESPN pulled sponsored content for DraftKings from its programs.

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