FanDuel, DraftKings Fire Back At New York Attorney General With Lawsuits

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FanDuel DraftKings NY lawsuits

Both FanDuel and DraftKings have gone on the offensive against New York attorney general Eric Schneiderman, filing lawsuits to block his cease-and-desist orders issued earlier this week.

The legal filings with the state supreme court by both major daily fantasy sports operators became public knowledge shortly after a rally was held outside of the AG’s office in Manhattan.

The AG’s office almost immediately said it would go to court to attempt to prevent FanDuel and DraftKings from operating in the state.

DraftKings’ lawsuit against the NY AG

The lawsuit looks to the state supreme court for relief, requesting “an injunction against the Attorney General’s taking any enforcement actions.” It asks the court to find against the AG’s statements on the point of law in his initial letter to DraftKings.

Centrally, DraftKings wants the court to declare that its “DFS contests do not constitute ‘gambling’ within the meaning” of the state constitution and penal law.

Here is the opening of the lawsuit:

This action seeks to stop New York Attorney General Eric Schneiderman from carrying out his threat to banish from this State a lawful industry beloved by hundreds of thousands of New Yorkers. The Attorney General, misreading New York’s gambling laws, is attempting to bully DraftKings—a celebrated company offering Daily Fantasy Sports (“DFS”) to millions of Americans—and its vendors into immediately shutting down DraftKings’ New York operations before it even has a chance to defend itself. Using strong-arm tactics and defying the rule of law, the Attorney General earlier this week sent a self-styled “cease-and-desist” letter to DraftKings, accusing it of engaging in prohibited “gambling” activities and supposedly giving DraftKings five business days to “cease and desist” before any enforcement proceeding would be 2 filed. But the Attorney General’s staff then turned around and contacted DraftKings’ business partners, threatening to take action against them unless they immediately ceased performing services for DraftKings in New York. Emergency declaratory and injunctive relief is therefore necessary to bar the Attorney General from continuing to abuse his power and to prevent the irreparable harm that will result from it.

You can read the entire filing here.

After the filing, a DraftKings spokesperson offered this statement:

Today, we have taken decisive legal action to prevent a unilateral, misinformed and legally misguided attempt by the New York Attorney General to act as “judge, jury and executioner” for daily fantasy sports in New York.  We are asking the New York Supreme Court to rule that the Attorney General’s cease-and-desist letter is unconstitutional, an abuse of discretion, and simply wrong.  We are confident in our legal position and intend to continue to fight to preserve the right of the over 500,000 New York consumers to play the fantasy sports games they love.

FanDuel’s lawsuit against the NY AG

FanDuel’s lawsuit seeks the same type of relief as the DraftKings lawsuit, and also follows a C&D order issued by Schneiderman this week.

Again, FanDuel seeks an injunction against any action by the AG and for a finding that its DFS contests “do not constitute ‘gambling’ within the meaning of New York law,” as outlined in the state constitution and the state penal code.

Here is the opening of the lawsuit:

This is an action seeking a declaratory judgment and injunctive relief to prevent the NYAG from pursuing further efforts to shut down FanDuel’s enormously popular fantasy sports activities in New York state. Such a shutdown would deprive hundreds of thousands of subscribing New Yorkers of the opportunity to pit their skills against the skills of others in selecting a “fantasy” team of athletes from different sports teams and competing in contests offering prizes to the players whose fantasy teams perform best. The NYAG, in a November 10, 2015 cease and desist letter that the NYAG disseminated to the press, has taken the legally incorrect position that the presence of prize money in these contests transforms FanDuel’s activities into illegal sponsorship of gambling, and that FanDuel’s advertisements have been false and misleading. FanDuel is entitled to a declaration that its conduct is legal and an injunction against enforcement efforts based on claims of illegality by the NYAG, so that FanDuel’s New York business is not destroyed as a result of the NYAG’s claims.

You can read the entire filing here.

NY AG’s reaction

The following statement was posted on the NY AG’s website soon after the two sites filed their suits:

“The Attorney General’s job is to enforce New York State law, and the law here is clear. Online sports gambling sites are illegal in New York. DraftKings and FanDuel are operating illegal sports betting websites under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling. As a result, our office issued a cease and desist letter to stop them from violating state law by accepting bets from people in New York. Because both companies have refused to follow the law in our state, we will take action to enforce state law.”