New York Court Hears Arguments On Fantasy Sports

Daily fantasy sports jackpot sites FanDuel and DraftKings hoped for a slam-dunk win in a New York City courtroom Wednesday afternoon, but they will have to wait for several more days or weeks to learn whether they'll be declared legal or illegal there.

New York is the first state where law enforcement has tried to shut down the sites outright, calling them illegal gambling. New York Attorney General Eric Schneiderman issued his ruling on Nov. 10.

FanDuel, based in New York City, has stopped taking money from players in New York, but Boston-based DraftKings has continued.

The two sites were asking Judge Manuel Mendez Wednesday for a ruling throwing out Schneiderman's ban. Mendez declined to rule immediately either way.

New York, with its size, visibility and status as home to the nation's media capital, has been widely seen as an important and potentially precedent-setting state for legal treatment of daily fantasy sports.

Laws in five states already made the sites illegal: Washington, Montana, Arizona, Iowa and Louisiana. The Nevada Gaming Commission determined earlier this fall the sites were a form of illegal gambling - a ruling many supporters of the sites dismissed as a transparent effort by a friendly regulator to protect Nevada casinos from competition.

Massachusetts Attorney General Maura Healey outlined an extensive set of regulations last week, aimed at banning people under 21 from playing on the sites, requiring they run separate games for casual gamblers and high-stakes expert competitors, and banning a host of insider-trading-type activities by team and league players and staff. Ohio, Texas, and Pennsylvania are among the biggest states taking up the ban-or-regulate question now, as well.

In court in Manhattan, Schneiderman's prosecutors insisted winning in daily fantasy sports involves a "material degree" of chance and luck, which therefore makes them illegal there.

Assistant Attorney General Kathleen McGee, head of Schneiderman's Internet bureau, rejected assertions by lawyers for the sites that they are games of skill, saying: "If someone set up a website that allowed people to make millions of bets on the outcome of spelling bees, that would be gambling."

John Kiernan, a lawyer for FanDuel, argued that his company's contests are immensely skill-based — and were indeed events outside and separate from what happens on the field. He likened daily fantasy sports players to general managers picking rosters of individual players, thus by skill increasing the possibility of success independent of whether a professional team wins or loses on the field.

DraftKings said in a statement: "Today, we presented compelling evidence that daily fantasy sports competitions are as legal now as they have been for the past seven years that New Yorkers have been playing them. We look forward to Justice Mendez's ruling."

Both companies have spent millions of dollars on advertisements, pitching the contests to casual sports fans as ways to win big simply by putting together competitive rosters.

They've drawn the attention of media companies, professional sports teams and other big investors. The companies offer games in most states, though regulators in Nevada and elsewhere have recently restricted their business.

The companies have said they're open to regulations and consumer protections, but argue legislatures should head that effort, not prosecutors.

NBC's parent company, Comcast Corp., and NBC Sports are among the investors in FanDuel. The Associated Press contributed to this report.

Copyright AP - Associated Press
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