DraftKings and FanDuel on Friday morning filed separate lawsuits in N.Y. Supreme Court against state Attorney General Eric Schneiderman, seeking a reversal of his cease-and-desist letter to the daily fantasy sports firms earlier this week, and escalating the ongoing legal drama against DFS to its highest peak yet. DraftKings' lawsuit seeks an injunction against the cease-and-desist order, declarations that daily fantasy does not constitute gambling under New York law, declarations that its advertising is not deceptive and declarations that its games are not fraudulent. DraftKings in a statement said that Schneiderman was seeking to act as “judge, jury and executioner” against daily fantasy in New York, and further went in the formal legal complaint to accuse him of “attempting to bully DraftKings ... and its vendors into immediately shutting down New York operations before it even has a chance to defend itself.” The complaint continues, “The Attorney General’s action constitutes a shocking overreach. He has unleashed an irresponsible, irrational, and illegal campaign to destroy a legitimate industry, intending to deprive hundreds of thousands of New Yorkers of the use and enjoyment of these services.” DraftKings in the suit said that New York represents about 7% of its U.S. customer base, and Schneiderman’s actions “are having a chilling effect on DraftKings’ business nationwide, as well as its ability to attract new investors and partners.”
NOT TO BE OUTDONE...: Meanwhile, FanDuel’s lawsuit follows similar ground and seeks similar relief. But the tone of its filing was far less vitrolic than DraftKings. FanDuel's lawsuit read in part, “The N.Y. AG ... has taken the legally incorrect position that the presence of prize money in these contests transforms FanDuel’s activities into illegal sponsorship of gambling." FanDuel pegged New York with 250,000 registered users in the lawsuit, representing 5% of its customer base. Those figures are far smaller than 600,000 players and 10% of the customer base FanDuel CEO Nigel Eccles indicated in a media call on Wednesday (Eric Fisher, Staff Writer).
STRIKING BACK AT THE EMPIRE: DraftKings also has added Boies Schiller & Flexner LLP to its legal team. Attorneys David Boies and Jonathan Schiller have represented the NFL in an antitrust dispute brought by the NFLPA, as well as the NBPA in a dispute over the negotiation of their CBA with the NBA (THE DAILY). On Long Island, Lane Filler notes the "worst case" for New York residents is that they will be able to play DFS through next Tuesday, and "may be able to play longer than that." There has been "no voluntary compliance" from DraftKings or FanDuel with New York AG Eric Schneiderman's ruling (NEWSDAY, 11/13). Meanwhile, outside of Schneiderman's Manhattan office on Friday morning, several hundred people took part in a pro-DFS rally. CNBC Field Producer Jess Golden was on site and quoted a FanDuel employee as saying that "more than one hundred of the protestors ... work directly" for FanDuel. Fortune's Daniel Roberts tweeted ,"I'd estimate that 75% of the (many!) people at this fantasy sports rally are either media or employees of DraftKings or FanDuel." Newsday's Jim Baumbach added, "Every person I've approached either is an employee of one of the sites or doesn't want to be quoted on the record being here" (TWITTER.com, 11/13).
SMOOTH MOVE? In Boston, Shirley Leung writes under the header, "New York Shouldn't Treat DraftKings, FanDuel Like The Mafia." Schneiderman "just started investigating these companies five weeks ago." Instead, he should "study the companies and think of ways to work with them," like what Healey and a handful of other states are doing (BOSTON GLOBE, 11/13). In Chicago, Rick Telander writes if these sites are just gambling sites, then New York "is carving a slippery slope." Telander: "Where and how do you draw the line? Insider trading is wrong on Wall Street and Fantasy Street. Punish it. But kill it? ... Regulate them. Or, like zits and crabgrass, they’ll just pop up somewhere else" (CHICAGO SUN-TIMES, 11/13).
DIFFERENT STROKES: In Las Vegas, J.D. Morris wrote the fallout of the New York decision "seems notably more intense than it has been" in Nevada. When the Nevada Gaming Control Board last month announced that DFS companies needed a gambling license to do business in Nevada, both FanDuel Inc. and DraftKings Inc. promptly said that they "would suspend their operations in the state." Aside from "launching heated verbal criticisms and circulating a petition opposing the gaming board’s decision, neither company appears to have put up much of a fight in Nevada since then." Nevada officials "have made it clear that the degree of skill versus chance involved" in DFS "does not matter to them" (LASVEGASSUN.com, 11/12).
