New York Daily Fantasy Sports Developments: Yahoo Out; DFS Not Likely In State Budget?

Posted on March 22, 2016

[toc]Yahoo Daily Fantasy will stop taking entry fees in the state of New York in the wake of settlements by DraftKings and FanDuel to cease operations in the state.

Also on Tuesday, a media report indicated that a powerful state Assemblyman is casting doubt on whether daily fantasy sports regulation would be tied to the state budget.

Yahoo out of New York

The first major domino to fall in the wake of DraftKings and FanDuel leaving New York was Yahoo, the No. 3 DFS operator in the space. A Yahoo spokesperson offered the following statement:

“Due to recent developments concerning paid Daily Fantasy Sports (DFS) in New York state, Yahoo will suspend offering paid DFS contests to residents of New York beginning Wednesday, March 23, pending further review.  Yahoo believes that its contests are lawful and we will continue to assess the legal environment for DFS while providing a compelling fantasy sports experience for all of our users.  Our decision today does not impact users in other states.”

A statement from the NY AG was released later in the day:

“Following yesterday’s announcement that FanDuel and DraftKings will follow the law and stop taking bets in New York State, Yahoo has now informed my office that it will do the same. New York law has long prohibited sports wagering, including betting on daily fantasy sports. As long as that’s the case, I will continue to enforce the law vigorously, and I am glad these companies have agreed to follow it.”

The New York attorney general’s cease-and-desist letters and legal action were only pointed at DraftKings and FanDuel. However, the AG’s action could be seen as a de facto action against any DFS operator, as the case of any DFS site would be essentially the same. Any operator that was still in New York prior to Monday was basically using DraftKings and FanDuel as legal cover.

Whether AG Eric Schneiderman would have the appetite to go after a smaller DFS operator is unknown, but it would probably be an unwise legal strategy to find out. So short of going to court to fight for legality — something we don’t expect to see — one would anticipate that most DFS operators will follow Yahoo’s lead in the coming days.

DFS and the budget, not meant to be?

The settlements in New York also shifted attention to Albany, and efforts to regulate DFS in the state legislature.

The idea that daily fantasy sports could be tied to the state budget buoyed hopes that regulation would be fast-tracked through the statehouse. But J. Gary Pretlow — the chairman of the Assembly Committee on Racing and Wagering — put a bit of a damper to those hopes in an interview with GambingCompliance (paywall).

From GC:

“Senator Bonacic’s bill is not in the Assembly version of the budget and it more than likely won’t be in the final version,” Pretlow told GamblingCompliance in an interview on Monday.

Pretlow was referring to a bill recently introduced by Sen. John Bonacic, which appears in the Senate’s proposal for the state budget.

Also, yet another DFS bill in New York?

Pretlow also indicated that he would be introducing his own DFS legislation. That’s a signal that he and Bonacic — the gaming chairman in the Senate — are not in lockstep about what should be done regarding DFS.

There are already six different bills in the legislature, although no action (beyond introduction) has been taken on any of them. Bonacic’s bill is likely the only one that merits watching (other than Pretlow’s future bill) however.

The state legislature is in session until the end of June, so there is still time to iron out the differences. But the fact that two key players in the NY legislature are not on the same page is a hurdle that will have to be overcome at some point.

 Luciano Mortula / Shutterstock.com

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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