Fantasy Sports Sites FanDuel, DraftKings Shuttered in New York

A New York judge has ordered fantasy-sports sites FanDuel and DraftKings to shutter their operations in the state, the latest blow to two digital operations that have become massively popular in recent months.

In a decision issued Friday, New York Supreme Court Justice Manuel Mendez supported a move for an injunction of the fantasy-sports sites operations by New York Attorney General Eric Schneiderman, noting that participants in the sites’ games pay entry fees that can range from low fees to something as high as $10,600. “The payment of an ‘entry fee’ as high as $10,600.00 on one or more contests daily could certainly be deemed risking ‘something of value.’,” the justice wrote in his decision. In other words, the judge seemed to feel the two sites promote online gambling.

The two sites have come under increasing scrutiny as they have blasted TV broadcasts of football games with hundreds of commercials imploring fans to take part in the fantasy-sports craze. More interesting, perhaps: Some of media companies that benefit from their ad spending are minority owners. Comcast and Time Warner own stakes in FanDuel and 21stCentury Fox is an investor in DraftKings.

In October, Nevada banned the two companies from doing business in the state until they obtained gambling licenses. The companies have also become enmeshed in accusations of insider trading after The New York Times reported that a DraftKings employee won $350,000 in a FanDuel contest.

FanDuel said it would appeal the ruling. “New Yorkers have been able to legally play our games for more than six years, and today’s preliminary decision was wrong and we expect we will ultimately be successful,” the company said in a statement. A spokesperson for DraftKings could not be reached for immediate comment.

At the heart of the furor is the companies’ business plan: Customer pay an entry fee and can win cash based on the performance of actual players in games that take place that day or week.

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