Daily fantasy sports websites DraftKings and FanDuel have been ordered to stop accepting bets in the state of New York, according to the New York Times. Attorney general Eric Schneiderman placed the cease-and-desist order, saying that the companies' games constitute illegal gambling under state law.
Fantasy sports are specifically exempted under the federal government's Unlawful Internet Gambling Enforcement Act, which prevents gambling businesses from accepting payment online to place a bet or wager. However, as the daily fantasy sports sites have became increasingly bigger businesses, states have begun questioning their legality. Last month, Nevada also said it views daily fantasy sport sites as gambling and ordered they cease operations until they obtain a state license.
Daily fantasy sports has boomed as a business in recent months, perhaps due to aggressive marketing campaigns. DraftKings' user base reportedly expanded from 3 million to 4.5 million users just from the week before the NFL season began to mid-September.
DraftKings and FanDuel contend that their games are more based on skill then luck, and thus should not be defined as gambling. In a statement, FanDuel accused the attorney general of dictating the activities of citizens, via the Times:
In a statement, FanDuel said: "Fantasy sports is a game of skill and legal under New York state law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country."
A Draft Kings spokesman called Schneiderman's decision "hasty" before vowing to pursue legal action.
"We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today, particularly since he did not take any time to understand our business or why daily fantasy sports are clearly a game of skill. We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love."
Last month, the attorney general began an investigation into the two companies by demanding names, job titles and descriptions of employees who compile data that could be used to gain a personal advantage. The companies came under scrutiny after concerns that a DraftKings employee won $350,000 playing a FanDuel game while potentially having access to information that hadn't yet been made available to the public.
Disclosure: SB Nation has a partnership with FanDuel to produce content about daily fantasy sports and advertise their games.