Daily fantasy sports’ house of cards continued to topple yesterday when New York Attorney General Eric Schneiderman ordered FanDuel and DraftKings to cease and desist from taking bets in the Empire State, home to 500,000 DFS players. According to 
the New York Times, Schneiderman has determined that DFS is flat-out illegal under New York State law. “It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: Not in New York and not on my watch,” Schneiderman said.
The attorney general’s office investigated DFS in the wake of the Ethan Haskell insider-dealing scandal and determined that “top 1 percent of DraftKings winners receive the vast majority of the winnings.” It also held that ads “seriously mislead New York citizens about their prospects of winning.” To make matters worse, the National Council on Problem Gambling is reporting “severe gambling problems” in connection with DFS.
According to the Times, the sites have themselves at least somewhat themselves to blame by taking action on games where skill in picking the winner is less and less of a factor. This includes NASCAR, mixed martial arts and golf, muddying the Unlawful Internet Gambling Enforcement Act exemption on which they rely for protection.
Schneidermann’s office also said he’d held several meetings with DraftKings representatives prior to his decision, contradicting DraftKings spokeswoman Sandra Macias, who said, “We’re disappointed he hasn’t taken the time to meet with us or ask any questions about our business model before his opinion.” The next step for both companies would be to challenge the attorney general in court, forcing him to prove that chance is, as the Times put it, a material factor in fantasy sports.
Schneiderman’s ruling puts the major sporting leagues, partners with FanDuel and DraftKings, in the hot seat, along with the owners of at least two NFL teams. It doesn’t befit a Jerry Jones or Robert Kraft or even a Roger Goodell to be involved in a criminal enterprise, after all. And law-enforcement proceedings in Florida, Manhattan and Boston are just getting started. The DFS crisis may not have reached a boiling point but the pot is definitely starting to simmer.
By coincidence, the American Gaming Association chose today to call for a national law legalizing and regulating sports betting (i.e., repeal PASPA). “On the topic of daily fantasy sports,” it added, “the AGA Board of Directors also made it clear that the industry seeks legal clarity and adequate consumer protections. The gaming industry wishes to succeed and to partner [read: get in on the action] where appropriate. State-by-state legal clarity and consumer protections are necessary prerequisites for daily fantasy’s success and future collaboration between our industries.”
* One month may not constitute a trend but gaming analysts would have to like last month’s results from Missouri, where foot traffic was flat but revenues jumped 6%. Slot
winnings rose 5% and table game revenues were up 10%. True, there was an extra weekend day, but that can’t totally account for the positive difference, especially since admissions did not increase. Gainers in the St. Louis market were Pinnacle Entertainment‘s River City (+15%) and Ameristar St. Charles (+4%), along with Penn National Gaming‘s Hollywood Casino St. Louis (+3%).
In the Kansas City market, Penn had an 8% increase at Argosy Riverside while Ameristar Kansas City was flat. Isle of Capri Kansas City suffered a 3% slippage while Harrah’s North Kansas City was robust, up 11%. Isle’s outstate casinos made up for the Kansas City difficulties, posting a 3.5% gain for October.
