UPDATE: DraftKings and FanDuel Banned In New York; Lawsuits Pending

A few weeks ago, we talked about how daily fantasy betting sites FanDuel and DraftKings are sullying the harmless fun of fantasy sports leagues by turning them into virtual games of chance that could entice some players to bet way over their heads.

According to a November 10, 2015 article appearing in the New York Times, New York State Attorney General Eric Schneiderman ordered FanDuel and DraftKings, two of the most popular daily fantasy league betting establishments, to stop accepting bets from New York State residents.

Prior to being elected state attorney general, Mr. Schneiderman had a reputation as a fierce consumer watchdog and he feels these sites are "leaders of a massive multibillion-dollar scheme intended to evade the law and fleece sports fans across the country." He launched an investigation in early October 2015, looking into leaked information that allowed a DraftKings employee to win a $350,000 prize at its competitor, FanDuel. A subsequent independent investigation didn't find any wrongdoing, but the AG remains convinced that daily fantasy sports betting is capable of "creating the same public health and economic problems associated with gambling."

Of course, FanDuel and DraftKings are not jumping for joy at the prospect of losing about 500,000 players from New York State, even though the sites have been adding tens of thousands of new users daily thanks to aggressive marketing campaigns. Spokespeople from both outfits claim that Mr. Schneiderman did not make an informed decision by prohibiting New Yorkers from participating in daily fantasy betting. DraftKings, in particular, stated that the AG, "hasn’t taken the time to meet with us or ask any questions about our business model before his opinion."

At present, Nevada is the only other U.S. state that has put the kibosh on daily fantasy sports betting, but now with New York joining the club, it is thought that other states considering legislation are going to pursue investigations into how these companies operate, and whether or not they are actually illegal gambling sites.

Since news of the New York ban broke, lawyers for the state, FanDuel and DraftKings have started racking up the hourly fees, filing lawsuits on behalf of the involved parties, and dragging some prominent entities into the mix, including the NBA, the New York Yankees, Dallas Cowboys owner Jerry Jones, New England Patriots owner Robert Kraft, the Dolan family who own Cablevision, the New York Rangers, and Madison Square Garden, along with dozens of others. The lawsuits allege that the sites violate illegal gambling laws and that investors in the sites are culpable as well.

Fantasy sports leagues used to be harmless, season-spanning fun for football, baseball, basketball, and hockey fans, but online sports betting has muddied the waters, allowing players to get a daily jolt from betting on sporting events worldwide, including MMA, NASCAR, golf, and other professional leagues. FanDuel and DraftKings claim fans can win hundreds of thousands, even millions of dollars, but as more information becomes available, we see that only a scant few players have ever been able to pull that off.

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