NY’s Schneiderman — Daily Fantasy Sports’ Biggest Opponent — Goes Down In Flames

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Schneiderman DFS

It’s difficult to tell the story of the daily fantasy sports industry without mentioning Eric Schneiderman.

The now-former New York Attorney General, Eric Schneiderman, was a central figure in 2015 as the DFS industry, led by DraftKings and FanDuel, came under fire on several fronts. No place was the fire hotter than in New York.

Fast forward several years, and Schneiderman resigned his post on Monday after claims of assault by four women. Legal Sports Report is not the place to recount those sordid details. And in the wake of those allegations, the tale of Schneiderman vs. DFS seems unimportant by comparison.

But it’s hard not to think back on Schneiderman’s impact on the entire history of one of the industries I cover. It’s a whole chapter in the book about the rise of DFS, and it even got the attention of 538’s Nate Silver:

Schneiderman and DFS

Schneiderman was not the first nor the last attorney general to weigh in on the legality of DFS. The first actually came in Nevada.

But there was arguably no legal battle in DFS more important than the one waged in New York, at the behest of Schneiderman. The opening volley came from Schneiderman calling the leagues “unregulated gambling venues.”

From there, he issued cease and desist orders to DraftKings and FanDuel, saying they were operating illegally under New York gaming law. Both companies ended up not serving New York for a time. Eventually both sites would stop serving the state until it formally legalized and regulated DFS in the summer of 2016.

Schneiderman was more aggressive than anyone in nearly any state on the legality of DFS in the US. And one can argue his actions might have led to the end of either DraftKings or FanDuel as we knew them. If DraftKings and FanDuel had been permanently cut off from one of the biggest states in terms of population and DFS users, it might have created a dire scenario for both companies, both from a regulatory standpoint and for their bottom lines.

Instead, New York was one in a long line of new DFS laws that were enacted in recent years. Interestingly, the AG’s office is now defending that law in court.

Would DFS be different today?

It’s fair to wonder how the story arc would be different for DFS sans Schneiderman and the New York legal battle.

It’s indisputable that the actions from Schneiderman cast a shadow over the industry. And while there were negative AG opinions on DFS in big states like Texas and Illinois, the rhetoric and impacts were less in those jurisdictions. (FanDuel did leave Texas after a settlement with its AG, but DraftKings stayed. Both have always served Illinois, despite being declared gambling by that state’s AG.)

But if New York had never gotten into the legality of DFS, 2015 and 2016 might have been less challenging for FanDuel and DraftKings (and the rest of the DFS industry, for that matter, which includes fewer operators than existed in the heady days of 2015).

Would it have fundamentally changed the industry if Schneiderman had never put DFS in his crosshairs? It’s at least possible, although we probably still would have seen DFS come under regulation in a variety of states, with or without him, after the attention that came from the DraftKings data leak that spurred chatter and action around the country. And New York passing a bill arguably gave more legitimacy to legalization efforts elsewhere.

Regardless, he was one of the biggest players in the history of DFS, for better or worse. And now he’s gone. The DFS industry might wish this scandal had come years earlier.