DraftKings, FanDuel Cease New York Operations, Eye Legislation

DraftKings and FanDuel have stopped operating paid online fantasy sports contests in New York as part of a deal with the state’s attorney general.

New York Attorney General Eric Schneiderman has been trying to shut down the daily fantasy sports sites since late last year, when he issued a cease-and-desist letter and a state court judge granted a preliminary injunction against the companies. A successful appeal of that injunction has allowed DraftKings and FanDuel to continue operating in New York—one of the companies’ most lucrative territories—during ongoing litigation.

Schneiderman is suing Boston-based DraftKings and New York-based FanDuel because he considers them illegal gambling businesses under current New York law. He wants them to pay restitution to New York customers, and he has also accused them of false advertising, among other allegations.

The agreement announced Monday amounts to a sort of temporary ceasefire for parts of the ongoing litigation. The companies and Schneiderman asked a state appellate court to delay the case until its September term. The agreement does not apply to Schneiderman’s pursuit of false advertising and consumer fraud claims, which will continue, he said.

In the meantime, DraftKings and FanDuel are apparently betting that the New York legislature will pass a bill legalizing their operations. Several daily fantasy bills have already been introduced in the current legislative session, which continues until mid-June, ESPN reported.

A copy of the full agreements with DraftKings and FanDuel can be viewed here and here. And here are the statements from Schneiderman, DraftKings, and FanDuel.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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