The New York legislature may have passed a bill to legalize daily fantasy sports sites in New York—which has now gone to Governor Andrew Cuomo—but state Attorney General Eric Schneiderman is not backing off his actions against DFS sites.
Schneiderman said he will continue to press suits claiming the two largest DFS sites—FanDuel and DraftKings—engaged in false advertising to deceive customers.
If Cuomo signs the DFS bill, however, Schneiderman could no longer seek to shut down the sites in the state saying they violate New York gambling laws. However, the sites could face fines if Schneiderman’s suit on false advertising is successful.
“The legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend,” Schneiderman said in a statement posted to his office’s website. “We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud.”
Included in Schneiderman’s actions to shut down the sites was a complaint against DraftKings and FanDuel for false advertising. His office argues that the two companies’ marketing sought to attract users by convincing them they could easily win money, when, in fact, the vast majority of contests on the site are won be expert players.
FanDuel and DraftKings also face consumer lawsuits alleging they duped players into participating in illegal gambling. The cases, which include false-advertising claims, have been consolidated before a federal judge in Boston for pre-trial information exchanges, according to the Associated Press.
DraftKings and FanDuel have shut down operations in New York under a deal with Schneiderman while the legislature debated legalizing daily fantasy sports. The legislature acted on the bills just before it ended its 2016 session and also as the deal between Schneiderman and the sites was expiring.
The New York bill classifies DFS games as games of skill, an important distinction that the industry has been fighting for as it faces legal battle in more than 30 different states. That distinction essentially nullifies Schneiderman’s argument that the games constitute illegal gambling under state law.
But under the deal between the operators and Schneiderman, they can’t resume taking players from the state until Cuomo signs the bill into law by July 1. Cuomo, however, has not said whether he will sign the law.
The bill, however, is seen as a big win for the DFS industry and could lead to several more states moving to legalize the games, joining six states that have already made the move.
“New York is obviously the most visible, and the biggest, and just in general a lot of states look to New York,” DraftKings CEO Jason Robins told Yahoo Finance. “Particularly on this issue, given New York was the limelight and New York was the place where the battle was being waged, I wouldn’t be surprised if others looked to New York. But that will differ state by state.”
