Op-Ed: Schneiderman Takes On The Fantasy Sports Companies


The future of fantasy sports as we know is caught between a rock and a hard place right here in New York.  Attorney General Eric Schneiderman has put the blitz on both Fanduel and Draftkings, two fantasy sports companies, claiming that the games are illegal forms of gambling.  Late last year Schneiderman moved to block the sites in the state.  If the sites do stay restricted for the long term, then the rest of the country could follow suit.

Attorney General Eric Schneiderman
Attorney General Eric Schneiderman

To add insult to injury, Scnheiderman wants the sites to pay back their customers, some who have lost up to thousands of dollars playing these games on the internet.  While the Attorney General’s office says it is illegal betting, the sites, who are in competition with one another, claim that their business models fit right into the realm of fantasy sports, which has been around for years.  At this point, that is the bulk of their argument.

Altogether, there is a lot of cash at stake.  In entry fees alone, the sites have milked up to $200 million adding to the chagrin of the attorney general.  Since last year, this case has bumped it’s way through the court system.  First, Scnheiderman field the lawsuit last November and he was granted a temporary injunction just before Christmas.  However, hours later that decision was reversed in the Appellate Division.  This week both parties are back in the Appellate Court to argue their case.

Where Schneiderman thinks the sites are running a fraudulent business, he feels that they have completely manipulated the success rates of their customers.  According to the complaint, just over 11 percent of Drafkings users were able to make money in 2013.  Hence, the key to the argument boils down to whether it is a game of skill or a game of chance.  With almost 90 percent of their players being unsuccessful, it seems like one has to be awfully lucky to be able to win.

New York is not the only state where these sites are under the radar.  The Nevada Gaming Commission stated that the sites were in fact running gambling practices and they would not grant licenses.  Also, in Illinois, Attorney General Lisa Madigan moved to block the sites from operating in the state.  Just last week, the state of Mississippi banned the two sites from operating in the state, making it 42 states where Fanduel and Draftkings are allowed to operate.  Other states that are looking to go after these sites are Arizona, Iowa, Louisiana, Montana and Washington.

Right now New York has been the state where the main battle is taking place. Nobody knows what the future holds for Draftkings and Fanduel here in New York and it will be telling to see what type of impact it will have on the rest of the country.