New York Attorney General Eric Schneiderman dealt a crippling blow to the fantasy sports industry on Tuesday when he said FanDuel and DraftKings could no longer accept bets in his state – a move that has caused some players in California to worry that their state could be the next to ban bets within the the billion-dollar industry.
Schneiderman issued cease-and-desist letters to both daily fantasy sites, citing a month-long investigation that revealed FanDuel and DraftKings constitute illegal gambling and are both schemes “intended to evade the law and fleece sports fans across the country.”
Schneiderman also accused both sites of requiring luck – rather than skill – to win. For years, officials from both sites have maintained that they offer games of skill, allowing the sites to be exempt under the hotly-contested Unlawful Internet Gambling Enforcement Act of 2006.
As of Wednesday, FanDuel and Draftkings, both of which are endorsed by pro sports leagues, had hired lawyers and were gearing up for a legal battle over the issue.
On the opposite side of the country, Nevada shut down daily fantasy sports sites last month, and in California, mounting state legislation could deal a similar blow, despite residents who disagree with the concept of an all-out ban.
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“I get that it’s fair for there to be regulation,” said Jake Zirkelbach of Pleasant Hill. “But I personally feel like it shouldn’t be banned. These are grown adults spending their own money, and sometimes they win more, and sometimes they don’t win anything. But it should be their decision to play."
In the beginning of October, Assemblymember Adam Gray (D-Merced) announced that a committee would begin investigating the sites. At the time, he credited consumer protection as the driving force behind the decision to take up the issue.
“This is an unregulated industry, whose revenue is in the billions of dollars,” Gray said. “All other gaming activities in the state are subject to regulations that ensure a safe environment for gambling.”
Gray is also behind AB1437 – a bill that could enact a number of restrictions on wagering websites in California and make them more aligned with other state and federally-regulated institutions. Among other stipulations, the bill is designed to ensure that the state is “not deprived of revenues to which it would otherwise be entitled.”
The Fantasy Sports Trade Association said it was ready for the challenges posed by pending legislation.
“We are still reviewing the bill,” said Paul Charchian, the association president. “But we look forward to working with Chairman Gray in 2016 to educate him on fantasy sports and the benefits that our innovative technology provides to sports-loving residents and the California economy.”
The office of California Attorney General Kamala Harris declined to comment, citing potential interference with the pending investigation into daily fantasy sports teams.
NBC's parent company, Comcast Corp., and NBC Sports are among the investors in FanDuel.