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A cease-and-desist order was issued by the New York State attorney general recently which ordered two fantasy sports giants to stop accepting “illegal” gambling bets under New York state law. Eric T. Schneiderman’s move against DraftKings and FanDuel has made him enemy number one of the multibillion-dollar industry that has acquired diehard fans and professional sports partnerships.

Says Schneiderman, “It is clear that DraftKings & FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.” The attorney general’s office and The National Council on Problem Gambling have said that it has received reports of “severe gambling problems” in some people who play daily fantasy sports.

Both companies have pushed back claiming that they are protected under a 2006 federal law that exempted fantasy sports from a prohibition against processing online betting.

DraftKings offered a statement through Sabrina Macias saying, “We’re disappointed he hasn’t taken the time to meet with us or ask any questions about our business model before his opinion.” According to Macias, there are more than 500,000 daily fantasy sports users in New York State.

FanDuel released its own statement of denunciation claiming that fantasy sports is not betting, it takes skill and careful planning, “Fantasy sports is a game of skill and legal under New York state law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country.”

Mr. Schneiderman began investigating the fantasy sites after a DraftKings employee accidentally leaked internal betting data then won $350,000 on FanDuel that same week. Findings to this end have drawn comparisons to insider trading — which has put a microscope on professional sports league senior management as well as the gambling sites.

New York is one of the growing number of states ruling that fantasy sports should be considered illegal gambling. Nevada recently mandated that daily fantasy sports fantasy companies cease operations until they have secured gaming licenses. A Florida grand jury has subpoenaed records of the fantasy sports trade group, the United States attorney in Manhattan has begun an investigation, and the Boston division of the FBI, where DraftKings’ are headquartered, has begun questioning fantasy sports players. With all this bad news on the rise, DraftKings and FanDuel will stand to lose millions of dollars, though they will save millions in advertising space bought by them during the NFL season. Each company has been known to spend upwards of $100 million for television ad campaigns. 

In 2014, FanDuel claimed it was signing up to 30,000 players a day, and nearly every N.F.L. team has a sponsorship deal with either or fantasy sports sites. Iconic NFL owners, Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots, even have equity stakes in the companies.

DraftKings & FanDuel demands that they bar employees from playing on their own sites, but there doesn’t appear to be much oversight to ensure they don’t. Both sites operate without the equivalent of a Securities and Exchange Commission or any other policing or regulatory organization.

With so many powerful players involved with fantasy sports’ success, it will be interesting to see how the fantasy sports field will appear in the upcoming months.  

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Fantasy football – Get Sports Info