NEW YORK (AP) – The head of the daily fantasy sports website FanDuel told his New York customers Wednesday that they should keep on entering the company’s contests, despite a warning from the state’s attorney general that they amount to illegal gambling.
FanDuel’s Nigel Eccles said its lawyers will try to persuade Attorney General Eric Schneiderman over the next five days that their business is lawful and that its 500,000 customers in the state should be able to keep playing.
It remains unclear what will happen when that time passes.
In cease-and-desist letters sent by Schneiderman’s office Tuesday to New York-based-FanDuel and rival DraftKings, the state’s top lawman said the companies were violating state gambling laws and offered games of chance, not skill.
He likened the companies’ business models to the lottery, saying his office’s one-month investigation revealed that the top 1 percent of players reaped the majority of winnings.
The letter cited criminal code but FanDuel’s attorney, Marc Zwillinger, said the company believed Schneiderman’s letter was a “prelude to a civil action.” Zwillinger said company officials had received no “assurance or threats one way or the other” that criminal action would be taken.
The company has technology that would allow it to stop users in certain geographic areas from registering in contests, should they have to, Zwillinger said.
Echoing his letter, Schneiderman said Wednesday that his office could pursue litigation if the companies don’t stop accepting play from New York.
“The legal process will move forward, and if they want to do it the hard way, they can do it the hard way,” he said in an interview. “But we think the law is very clear.”
Martha Coakley, a legal adviser to Boston-based DraftKings and a former Massachusetts attorney general, said Schneiderman’s legal reasoning was wrong and the company is pursuing its options.
“We believe the legal analysis involved in this is flawed and that it was reached too hastily, without really looking at all the evidence,” she said.
Daily fantasy sports has exploded in popularity in recent years, with games growing more quickly than more-established season-long fantasy sports leagues. Though other companies such as Yahoo and CBS offer daily fantasy sports games, DraftKings and FanDuel have become highly visible, thanks to an aggressive ad campaign ahead of the 2015 NFL football season.
In the games, participants pay entry fees and pick players to fill rosters in order to win money competing in contests against other sports buffs.
Both companies have said they support certain regulations and consumer protections but argue that legislatures should be the driving force.