DraftKings and FanDuel Say They Will Fight a Ban in New York State

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Online Fantasy Sports Sites, FanDuel And DraftKings, Under Scrutiny Of Government
Wanna bet whether it'll be around in a year? Photo: Scott Olson/2015 Getty Images

Daily fantasy-sports outfits and saturation advertisers DraftKings and FanDuel are digging in their heels for a fight after New York State attorney general Eric Schneiderman sent both companies a cease-and-desist order two days ago.

The letter said that a study by the AG’s office had concluded that the business models of the two companies constituted illegal gambling under New York State law. Nigel Eccles, the CEO of New York–based FanDuel, takes issue with the ruling. “We feel that the A.G.’s office has taken the very extreme and very sudden position that New Yorkers are not capable of making their own decisions when it comes to playing fantasy sports,” he told reporters yesterday.

Schneiderman’s order states that the companies have five business days to comply, and reps from both DraftKings and FanDuel have said they intend to allow their players to use their services up to the last hours that they’re legal and then fight after that.

But even if they decide to defy the order, they may have trouble keeping business partners onboard. Vantiv Entertainment Solutions, a financial processor that currently works with DraftKings and FanDuel, recently notified the companies that it intends to comply with Schneiderman’s order. According to a source close to FanDuel, the company is exploring its options with at least one other payment processor.

In New York, the two companies have more than 1.1 million active users combined, who account for 13 percent of the national daily fantasy-sports market, according to Adam Krejcik of finance firm Eilers Research. “If they have to pull out, it sets a negative precedent and would be extremely troubling for the industry,” said Krejcik. “They could withstand the pullout of Nevada. They can’t afford to lose New York.”

DraftKings, FanDuel Will Fight New York Ban