A New York appeals court has blocked the threatened shutdown of daily fantasy sports sites DraftKings and FanDuel, just hours after a judge ordered them on Friday to temporarily stop taking entries in the state.
Judge Manuel Mendez’s order came at the request of New York Attorney General Eric Schneiderman, who claims that the daily contests for cash are a form of gambling outlawed by state law and should be banned.
While the future for the companies briefly looked bleak, Friday afternoon’s appeals court ruling is a victory for DraftKings and its lead attorney, David Boies, who had immediately appealed the judge’s initial ruling, according to the Boston Globe
“We look forward to a full and fair hearing and are confident we will demonstrate clearly to the Court why we should be able to continue to offer our DFS (daily fantasy sports) games in New York permanently,” he said after the immediate stay was granted. “We are encouraged by our dialogue this week with New York state legislators. We look forward to continuing that conversation.”
Before the appeals ruling was announced, Boies defended the Boston-based startup by saying: “Daily Fantasy Sports contests have been played legally by New Yorkers for the past seven years and we believe this status quo should be maintained while the litigation plays out.”
As the popularity of the genre skyrockets, losing the New York market would be a major blow for both companies. In court filings, DraftKings estimated it had about 113,000 active paying customers in New York state during October, and had so far collected about $100 million in entry fees from them this year.
Both DraftKings and FanDuel came under scrutiny earlier this year 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.
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In the aftermath, ESPN pulled sponsored content for DraftKings from its programs.
Pamela Chelin contributed to this report.