Fantasy sports sites DraftKings and FanDuel declared to be gambling and banned from New York
Daily fantasy sports sites have been declared as constituting illegal gambling and told to shut down in the state of New York as part of the latest tussle between US state government and the multi-billion dollar industry.
Fantasy sports sites DraftKings and FanDuel are each worth over $1bn and offer fans the chance to enter daily fantasy sports competitions for as little as $1 and compete for prizes of up to $2m.
However, sports gambling in the US is illegal in most US states, including New York, whose attorney general ruled yesterday that both companies must cease operations for violating federal law.
Attorney general Eric Schneiderman said in a statement: "Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling and misleading New York consumers.
"It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country."
Both websites have faced increasing scrutiny in recent months and suffered a similar blow in October when Nevada ordered that they couldn't operate in the state without a gambling licence.
DraftKings and FanDuel insist that they offer skill-based games rather than chance-based wagers, which could be construed as legal according to the 2006 Unlawful Internet Gambling Enforcement Act.
In a statement FanDuel, who recently opened a 40,000 square-foot headquarters in New York, insisted that "fantasy sports is a game of skill and legal under New York state law".
DraftKings echoed the sentiment saying Schneiderman "did not take any time to understand our business or why daily fantasy sports are clearly a game of skill."
Both sites now have five days to respond to the ruling which could prove devastating for their businesses – according to industry research New York has more daily fantasy users than any other state.