FanDuel & DraftKings Get To Stay In Biz In New York, For Now – UPDATE

UPDATE, 1:06 PM: Hours after having the plug seemingly pulled by a state judge, DraftKings and FanDuel are back in business in New York state — at least for now. An Appeals Court has granted the fantasy sports sites a temporary stay of the injunctions ruling from Judge Manuel Mendez this morning.

Awaiting a formal appeal from the sites, this latest ruling will halt efforts by NY Attorney General Eric Schneiderman to shut down the daily fantasy sports sites  for what his office term illegal gambling. The appeals hearing is expected sometime in January so you could say FanDuel and DraftKings got an early Christmas today or at the very least so holiday season sports action.

Whether the appeal is successful or not in the long run is another matter, but at least one lawyer is willing to bet things could work out for the sites. “We look forward to a full and fair hearing and are confident we will demonstrate clearly to the Court why we should be able to continue to offer our DFS games in New York permanently,” DraftKings lawyer David Boies said Friday after the immediate stay was granted. “We are encouraged by our dialogue this week with New York state legislators. We look forward to continuing that conversation.”

PREVIOUS, 7:24 AM: (updated with statements) A New York state judge this morning sided with the Empire State’s Attorney General and has shut down the daily fantasy sports sites. The preliminary injunction granted by Judge Manuel Mendez says that FanDuel and DraftKings likely are illegal under the state’s gambling laws.

“We are disappointed with the Court’s decision, and will immediately file an emergency notice of appeal in order to preserve the status quo,” DraftKings lawyer David Boies said Friday morning. The powerhouse counsel from Boies, Schiller & Flexner LLP had made it clear last month that the site would make such a move if the court ruled against it. “Daily Fantasy Sports contests have been played legally by New Yorkers for the past seven years, and we believe this status quo should be maintained while the litigation plays out.”

New York Attorney General Eric Schneiderman has a different response, as he made clear online:

Friday’s ruling (read it here) comes after the NY AG early last month gave notice he would seek to shutter the hugely popular daily fantasy sports sites for essentially conducting gambling. ny-ag-logoBoth FanDuel and DraftKings disagreed with that, insisting that what they offer is games of skill to their players, not chance — though of course money is always at play. Several other states including Nevada already have cast FanDuel and DraftKings out of their jurisdictions based on similar premises as those articulated by Schneiderman, but none is as large or as lucrative to FanDuel and DraftKings as New York.

Both sites are well known to any sports fan in America from their ubiquitous ads and sponsorship banners for the NFL, NBA and other leagues’ games. Major media companies and the likes of Dallas Cowboys owner Jerry Jones have a stake or interest in FanDuel and DraftKings — an interest that might be reconsidered with today’s ruling.

Friday’s ruling is a big loss for both of the sites, which also have sought the path of the courts to keep their businesses running in New York. Having said that, FanDuel actually stopped taking new customers in the state soon after Schneiderman sent cease-and-desist letters to both sites’ CEOs on November 10. In addition, both companies saw payment and transaction vendors contacted by the NY AG’s office, a move they claim put their business in the state in peril. And that biz is big: DraftKings is estimated to have 113,000 active players in New York and has made more than $100 million in entry fees alone in 2015.

So, with appeals being filed now, place your bets.

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