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NY judge orders DraftKings, FanDuel to stop operating, appeals court overturns decision

It was a bad day for daily fantasy sports. Then, an appeal.


Josh Katzowitz


For those daily fantasy sports players in New York who were hoping the courts would allow DraftKings and FanDuel to continue operating in their state, Friday brought bad news. And then good news.

New York Supreme Court Justice Manuel Mendez on Friday granted preliminary injunctions against the two sites, a month after the state’s attorney general Eric Schneiderman sued them, claiming they are illegal gambling sites. DraftKings and FanDuel, instead, say they host games of skill.

But later Friday, as Forbes wrote, the New York Appeals court granted an immediate stay of the injunction until the appeals hearing in January, and DraftKings—which never stopped operating in the state, despite receiving a cease-and-desist letter last month from Schneiderman—said it would continue to offer games to New York residents.

“We look forward to a full and fair hearing and are confident we will demonstrate clearly to the Court, we should be able to continue to offer our DFS games in New York permanently,” said David Boies, a DraftKings attorney.

Mendez granted the injunction, in part, because he believes the state has a better chance to win the lawsuit if it goes to trial.

“The balancing of the equities are in favor of the (attorney general) and the State of New York due to their interest in protecting the public, particularly those with gambling addictions,” Mendez wrote, via USA Today. “Fanduel, Inc. and Draftkings, Inc., are only enjoined and restrained in the State of New York, DFS is permitted in other states, and the protection of the general public outweighs any potential loss of business.”

At first, the judge’s ruling continued a spate of bad news for FanDuel and DraftKings, including allegations of insider trading, FBI investigations, and an attempt by Nevada to ban the sites.

Said Schneiderman in a statement after the injunction was initially granted: “We are pleased with the decision, consistent with our view that DraftKings and FanDuel are operating illegal gambling operations in clear violation of New York law. I have said from the beginning that my job is to enforce the law, and that is what happened today.”

At the time Schneiderman sent both companies a cease-and-desist letter last month, FanDuel complied with the attorney general, even though DraftKings continued to allow New York customers to play. 

Yahoo cited sports analytics company Superlobby in saying that since FanDuel stopped operating in New York, entry fees into its weekly games have dropped by about 25 percent. DraftKings, meanwhile, is down about 12 percent.

Photo via Ian Kennedy/Flickr (CC BY 2.0)

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