Winning is getting more and more difficult for fantasy sports fans.
The industry's two biggest players - DraftKings and FanDuel - have been ordered by the New York State attorney general to cease accepting wagers from New York residents.
The $4 billion dollar fantasy sports market took a hard hit after it was found that its activities constituted to illegal gambling in New York. Though the two juggernauts of fantasy sports have yet to be ordered to cease operations in the state, attorney general Eric T. Schneiderman sent a strong message that the fantasy was going to end.
"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.... Today we have sent a clear message: not in New York, and not on my watch," Mr. Schneiderman warned.
Both DraftKings and FanDuel have their largest customer base in the state of New York. FanDuel is headquartered in the state while its rival just set up a new satellite office in Manhattan. The two companies heavily advertise in New York's subways, Madison Square Garden and even have deals with the New York Knicks, Rangers, Liberty, Giants, Yankees, and Jets. They're everywhere. For now.
The industry's growth went unfettered by using the Unlawful Internet Gambling Enforcement Act of 2006 to defend their legality by contending their games required an element of skill. That line didn't work on Schneiderman. "Each DraftKings/FanDuel wager represents a wager on a 'contest of chance' where winning or losing depends on numerous elements of chance to a 'material degree'," he argued.
Nevada was the first state to end the dream of fantasy sports. Both the state's attorney general and Gaming Control Board ruled last October that fantasy sports met the definition of sports gambling and thus required a license to operate within the state. After that ruling, both DraftKings and FanDuel stopped doing business in Nevada.
It was around the time of that ruling that fantasy sports' bubble was beginning to burst. A scandal involving a DraftKings employee using insider data to win $350,000 at rival site FanDuel ignited the flames surrounding the unregulated industry. With New York tightening its grip on DraftKings and FanDuel's largest market, it will only be a matter of time before other states start playing the same game.
