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Ruling shuts down FanDuel, DraftKings in N.Y. … for now

FanDuel and DraftKings were told to temporarily close their New York operations by a judge who said the two leading daily fantasy sports sites can’t operate in the state while authorities fight to shut them down for good.

Until recently, New York was one of the biggest markets for daily fantasy sports sites. But the state has turned against them in recent months after Attorney General Eric Schneiderman began looking into FanDuel and DraftKings, culminating in his November order barring the two from operating in the state.

DraftKings and FanDuel fought Schneiderman’s order, asking the court to delay the ban until a judge rules on the bigger question of whether the law allows daily fantasy sports. Meanwhile, several smaller operators shut down voluntarily. FanDuel stopped as well, though DraftKings stayed open.

Yahoo, which was subpoenaed over its daily fantasy operations but wasn’t included in Schneiderman’s order, also remains open for business in New York.

Friday’s court decision is temporary, freezing things until there’s an ultimate ruling on whether Schneiderman is right that the companies are illegal gambling operations under New York law and should be blocked for good. The judge gave the companies 30 days to respond to Schneiderman’s claims.

Six states

Six states have banned daily fantasy sports games, and a victory for Schneiderman might prompt others to follow, said Matthew Schettenhelm, a Bloomberg Intelligence legal analyst in Washington, before the judge issued his decision.

“Whatever happens here will have impacts far beyond the state,” Schettenhelm said. “For one, because many other laws’ definitions are similar, but also just because it’s New York and it’s certainly going to get the attention.”

In his ruling, Justice Manuel Mendez said the attorney general “established the likelihood of success” on his claims, citing the state’s “interest in protecting the public, particularly those with gambling addictions.”

FanDuel spokeswoman Justine Sacco and DraftKings spokeswoman Sabrina Macias didn’t immediately respond to emails seeking comment.