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DraftKings and FanDuel Ceasing Operations in NY...for Now

By March 21, 2016No Comments
DraftKings and FanDuel Shutdown in NY

FanDuel and DraftKings have reached a settlement in NY.

According to an announcement from the NY AG's office they have reached an agreement with both operators to cease operations until September. This is pending legislation that will allow them to operate in the state.

If legislation is passed earlier, it's likely operations would resume before September.

NY Daily Fantasy Legislation

According to Legal Sports Report (LSP), there is only one DFS bill that bears watching at this time: S6739 which is sponsored by Sen. John Bonacic.

The senator heads the Racing and Gaming Committee in the Senate and recently attempted to attach DFS regulation to the Sentate's budget framework.

It was a move that was done to "send a message to the court that we're preapred in the state of New York to allow daily fantasy sports to continue -- provided it's monitored, it's regulated and there are consumer protections."

According to LSP, here are the provisions of S6739:

  • The bill creates the Fantasy Sports Contests Division within the Financial Frauds And Consumer Protection Unit to promulgate regulations and license operators.
  • DFS sites that had already been operating in the state before Nov. 10 (the state’s AG issued cease and desist letters to DraftKings and FanDuel on that date) may continue to do so while their registration is considered.
  • Licensed operators must pay a one-time fee of $500,000. That fee can be applied, in whole or in part, against an operator’s tax obligation for a 36-month period after receiving its license.
  • Operators are taxed at a rate of 15% on gross revenue generated by players in New York.
  • A minimum age of 18 is established for players.
  • DFS may not involve any contests involving collegiate sporting events or horse races.
  • DFS is exempted from the part of the NY penal code dealing with gambling.

FanDuel Statement

FanDuel issued the following statement via a company spokesperson:

“We are announcing that as of today, FanDuel will cease offering paid contests in the state of New York per the terms of a settlement reached with the Attorney General on certain aspects of the ongoing litigation. 

New York is a critical state for FanDuel.  FanDuel is headquartered in Manhattan, where we employ more than 170 young smart, passionate fans who are committed to innovating and providing the best fantasy experience possible.  We are proud to be one of New York’s largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York.”

DraftKings Statement

"Effective today, as part of a settlement reached with the Attorney General’s office, DraftKings will stop offering paid daily fantasy sports contests in New York State.

We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love."

When Will NY DFS Players Be Stopped from Playing?

It is our understanding that DFS players in NY will be shut out from the sites starting today (March 21st). The settlement agreements reference an "effective date" of March 21st.

If a NY resident is outside the state and located somewhere that DFS is legal, they would be permitted to play while in those states.

A press conference will be held at 2pm eastern today (3/21/16).

Nick Schreck