Sorry fantasy sports fans. DraftKings and FanDuel have agreed to stop operating in New York State.
In a deal with State Attorney General Eric Schneiderman, DraftKings and FanDuel have agreed to shut down and stop taking bets in New York State until their court hearing in September.
Their hearing had been scheduled for May, but this will give the sites more time to lobby legislators to change the law to make their operations legal in New York State. The sites had been using a 2006 law, which protects traditional fantasy sports, to get by.
"I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter. As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. Today's agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue," said Schneiderman in a statement.
Schneiderman argues under current law, the sites constitute illegal gaming. The sites allow players to pay to enter daily leagues where they draft a fantasy sports team to potentially win real-life prizes.
Though the sites argue they are games of skill and Schneiderman says the leagues amount to gambling, since players are "placing bets on events outside of their control or influence."
According to stats from Eilers Research, 12.8 percent of all daily fantasy sports players live in New York, so shutting down will be a major blow to the sites.
The sites took in about $200 million in fees last year from 600,000 New Yorkers and Schneiderman is also looking to have DraftKings and FanDuel return that money.
FanDuel released the following statement about the agreement:
"New York is a critical state for FanDuel. FanDuel is headquartered in Manhattan, where we employ more than 170 young smart, passionate fans who are committed to innovating and providing the best fantasy experience possible. We are proud to be one of New York's largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York."