DraftKings and FanDuel aren't going to get sacked in New York state without putting up a fight.
After the state ordered both daily fantasy sports companies to shut down their operations Tuesday — ruling that they are illegal gambling — both DraftKings and FanDuel filed lawsuits Friday to contest that order and remain open throughout the Big Apple. Each company is asking the state court to rule that their games are not illegal gambling.
According to Reuters, part of DraftKings' lawsuit alleges that New York Attorney General Eric Schneiderman was "using strong-arm tactics and defying the rule of law."
This comes after the New York Attorney General's office mandated Tuesday that each daily fantasy site stops accepting money from New Yorkers, alleging that fantasy players "are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes," as reported by Reuters.
To that end, each site says that their platforms are games that require knowledge and skill and are not gambling, which is based on luck.
If both companies are shut down in New York, it will be a significant blow to the fantasy sports industry, considering Eilers Research tells Reuters that the state has more daily fantasy sports players than any other U.S. state.
In addition, if Schneiderman's ruling that DraftKings and FanDuel are illegal gambling is made final in New York, it could pave the way for other states to declare the same and for the industry to be federally regulated across the country.
Earlier on Friday, 100 protesters crowded around Schneiderman's New York City office to protest his decision.
Of course, the scrutiny over the daily fantasy sports industry started early last month, when it was reported that a DraftKings employee used insider information to win $350,000 on rival site FanDuel. That paved the way for the FBI and U.S. Justice Department to investigate each site, and for Schneiderman to get involved.
The companies have flooded television, the Internet and radio with aggressive advertising — with FanDuel repeatedly stating it plans to give out $2 billion in cash prizes this year — making the scrutiny unavoidable.
Let's see how this pans out.
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