The New York attorney general’s decision that daily fantasy sports betting sites FanDuel and DraftKings are illegal gambling operations is a blow to the companies, but the industry could have more legal headaches yet to come.
The sites have been doing business in a number of states where they’re legally dubious. Several states in which the companies are operating have laws similar to New York, while a few have even stricter prohibitions.
That could pose more risk than the companies or their backers have let on. Federal law criminalizes gambling businesses that operate in violation of state law, with penalties that can include prison time and fines.
Florida sports and gaming attorney Daniel Wallach says that by his count the sites are on shaky legal ground in about a dozen states.
FanDuel company officials have vowed to keep their New York operations running after the state’s top lawman told them to stop.
FanDuel CEO Nigel Eccles told reporters Wednesday that their 500,000 customers in New York should keep playing.
The companies have five days to try to persuade Schneiderman that their operations are lawful. It’s not clear what will happen after those five days pass.
DraftKings legal adviser Martha Coakley says Schneiderman’s legal analysis is flawed. She says the company will challenge it.
Coakley was formerly attorney general of Massachusetts.
