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NY AG to DraftKings, FanDuel: Stop Taking Bets From New Yorkers

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By Christopher Coble, Esq. on November 11, 2015 11:05 AM

New York Attorney General Eric T. Schneiderman has never been particularly quiet in his protection of the state's consumers. Schneiderman has sued FedEx for shipping untaxed contraband, J. Crew and other retailers for on-call scheduling, Barney's for frisking minority shoppers, Bank of America and Wells Fargo for mortgage foreclosure abuses, UPS for falsifying delivery times, and even Donald Trump for his sham university.

And now the busiest AG in the country is setting his prosecutorial sights on daily fantasy sports sites. Schneiderman has warned DraftKings and FanDuel that their games are prohibited by state gambling laws and to stop accepting bets from New York residents. Here's betting that they'll listen.

Not Eminently Winnable

Schneiderman's office opened an investigation into daily fantasy sites last month. After finding that these "operations constitute illegal gambling under New York law," the AG sent cease and desist letters to FanDuel and DraftKings, giving them notice that the office would sue the sites if they continued operations in the state.

In the letter to FanDuel, Schneiderman cited the harm to residents as part of the ban's basis:

Finally, during the course of our investigation, the New York Attorney General has been deeply concerned to learn from health and gambling experts that DFS appears to be creating the same public health and economic problems associated with gambling, particularly for populations prone to gambling addiction and individuals who are unprepared to sustain losses, lured by the promise of easy money. Certain structural aspects of DFS make it especially dangerous, including the quick rate of play, the large jackpots, and the false perception that it is eminently winnable. Ultimately, it is these types of harms that our Constitution and gambling laws were intended to prevent in New York.

A Losing Bet

New York becomes the seventh state to outlaw daily fantasy, after Nevada shut down sites last month. State gambling laws can vary, but most fantasy leagues have been deemed legal under the federal Unlawful Internet Gambling Enforcement Act (UIGEA), which allows online contests that have "an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events."

But the tide is definitely turning against daily fantasy sites like DraftKings and FanDuel. And one has to wonder whether this is out of genuine concern for vulnerable citizens, or an attempt to protect state-sanctioned casinos and lotteries.

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