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Schneiderman issues cease-and-desist letters to FanDuel, DraftKings, demanding companies stop accepting 'illegal wagers' in New York

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Wed, Nov 11th 2015 07:15 am

Schneiderman: Daily fantasy sports is neither victimless or harmless

Attorney General Eric T. Schneiderman issued cease-and-desist letters to daily fantasy sports wagering sites DraftKings and FanDuel on Tuesday, ordering both companies to immediately stop accepting wagers inside New York. The AG's action follows an investigation by his office that found DraftKings and FanDuel to be in violation of New York state law against illegal gambling. Traditional, season-long fantasy sports are not implicated by the AG's action.

"Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers," Schneiderman said. "Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and 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." 

In addition, the investigation found that both companies consistently use deceptive advertising to lure consumers into an unregulated online gambling operation that, while marketed as a game anyone can win, in fact distributes the vast majority of winnings to a small subset of experienced, highly sophisticated players. These winners constitute roughly 1 percent of all players on the two sites. The AG's investigation also revealed both companies deliberately target demographics susceptible to problem gambling.

A copy of the letter sent to DraftKings can be found here. A copy of the letter sent to FanDuel can be found here.

This case is being handled by Assistant Attorney General Justin Wagner, Assistant Attorney General Jordan Salberg, Assistant Attorney General Aaron Chase, Senior Enforcement Counsel and Special Adviser to the Attorney General Tim Wu, Internet Bureau Chief Kathleen McGee, Senior Adviser and Special Counsel Simon Brandler and Executive Deputy Attorney General for Economic Justice Karla Sanchez.

On Tuesday night, Congressman Chris Collins released a statement reading, "New York's attorney general once again proved that he is singularly focused on grabbing newspaper headlines. In this draconian decision, Schneiderman is unilaterally denying hundreds of thousands of New Yorkers that use FanDuel and DraftKings the ability to compete in this game of skill. Instead of looking to score political points, the attorney general should be working with federal and state lawmakers to ensure laws are being followed. Instead, he's opting for a two-minute drill. Let's all take a timeout from government overreach and make sure we get it right." 

Collins serves on the House Energy and Commerce Committee, which is the primary panel overseeing these games on the federal level. 

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