Fantasy sports sites sue to keep doors open in NY
By Liana B. Baker and Suzanne Barlyn
NEW YORK (Reuters) - Top daily fantasy sports companies DraftKings and FanDuel filed lawsuits on Friday to contest an order to shut down their online gaming operations in New York state, asking a state court to rule that the games are not illegal gambling.
The New York attorney general's office on Tuesday ordered the two companies to stop taking money from New Yorkers and declared the games to be against state law because customers "are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes."
DraftKings said in its lawsuit that New York Attorney General Eric Schneiderman was "using strong-arm tactics and defying the rule of law," accusing him of acting as judge, jury and executioner of the companies.
Being forced to shut down in the state could be a crippling blow for the fast-growing, multibillion-dollar industry, as New York has more daily fantasy sports players than any other U.S. state, according to Eilers Research.
DraftKings accused Schneiderman of abusing his authority by threatening to take action against the company's payment processors, Vantiv Inc and PayPal Holdings Inc, if they did not stop working with DraftKings.
The attorney general's declaration that daily fantasy sports is gambling, if correct, would make it "nearly impossible" for New York's legislature to pass a law allowing the games, said Bennett Liebman, former New York state deputy secretary for gaming and racing.
New York's Constitution prohibits gambling though the state has carved out a handful of exceptions, including horse racing and the state lottery. But each of those changes required amending the state's Constitution, a years-long process that requires approval of legislation by two successive legislatures, followed by a public vote, he said.