Judge Grants Injunction Barring FanDuel and DraftKings from Doing Business in New York

New York State Supreme Court judge Manuel J. Mendez has granted Attorney General Eric Schneiderman's injunction seeking to bar daily fantasy sports sites DraftKings and FanDuel from operating in New York State. Judge Mendez also denied motions filed by both DFS sites looking to prevent the attorney general and New York State from interfering with their business operations in state.

Schneiderman filed two separate cases against DraftKings and FanDuel on November 17, and asserted nine causes of actions against both, alleging they were engaged in illegal and fraudulent activity in the state. In the filings, he also included a request for injunctive relief to bar both sites from accepting fees/wagers in New York State while the action was pending, and that was granted today. Schneiderman relied upon the General Business Law and New York State constitution, among other statutes. Judge Mendez held that the attorney general had established a likelihood of success on the merits and thus granted the injunction "enjoining and restraining DraftKings Inc. [and FanDuel] from doing business in the State of New York, accepting entry fees, wagers or bets from New York consumers in regards to any competition, game or contest run on DraftKings, Inc.'s [and FanDuel's] website."

In making his decision, Judge Mendez quoted the Penal Code's definition of gambling and noted that the attorney general established a prima facie case under General Business Law section 349—which covers deceptive business practices—in showing that "the defendant is engaging in an act or practice that is materially misleading or deceptive, likely to, '…mislead a reasonable consumer acting reasonably under the circumstances.'" In proving these allegations, the attorney general put forth screenshots from the websites showing how a player signs up for a game, the terms of use, the scoring systems used by both companies, and the ranges of entrance fees, which were argued to be more akin to parlays and prop bets.

Judge Mendez also noted that neither company disputed the evidence or arguments from the attorney general but argued that daily fantasy sports were a game of skill.

This does not mean that Daily Fantasy Sports are dead in New York State from now on, just while this action is pending in the courts. It is, however, troubling for both companies because the standard for granting such relief requires a likelihood of success on the merits, which means Judge Mendez thinks the attorney general has a pretty good case.

You can read the whole decision below

Update: Both FanDuel and DraftKings appealed this decision and the New York State Court of Appeals granted an interim stay of the injunction. This means both companies can continue to accept wagers in New York, at least for now.

NY appeals ct grants interim stay, lets @DraftKings @FanDuel continue doing #dfs business short-term @mikeerman1 is there! @Reuters
— Suzanne Barlyn (@SuzanneBarlyn) December 11, 2015

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