NY Attorney General rails on Daily Fantasy Sports

New York Attorney General Eric Schneiderman has launched a war against daily fantasy sports (DFS). After declaring the activity illegal, his office has gone as far as to sue DraftKings and FanDuel for player losses. And he recently shed some light on just why he’s so adamantly against DFS being in New York.

Speaking with PBS, Schneiderman was quick to point out one reason why his office is investigating the industry’s top sites.

“I think DraftKings and FanDuel spent something like $31 million in the first week of the NFL season alone,” he said. “Then the stories started to break about employees of these companies using non-public information to get a competitive advantage to win money on other sites. At that point, we launched our investigation.”

Schneiderman was also quick to defend his assertion that DFS is indeed gambling.

“It’s clear to us that what they’re doing is gambling, and there are people who have gambling addiction problems,” Schneiderman explained. “And for them to contend that it’s not gambling, you can almost lure people who know they have gambling addiction problems into getting back involved in betting. And gambling addiction experts have come forward to say this is a particularly pernicious form of gambling.”

DFS sites and their proponents say that a federal law called the Unlawful Internet Gambling Enforcement Act (UIGEA) omitted fantasy sports from its language in 2006. The UIGEA calls on banks and other financial institutions not to process online-gambling related transactions. However, Schneiderman says that nowhere in the UIGEA does it protect DFS.

“No, the 2006 federal Internet gaming statute is not ambiguous,” he said. “It does not prohibit gambling on fantasy sports. Now in 2006, of course, the technology for DraftKings and FanDuel didn’t exist. All that exists were the season-long rotisserie baseball leagues and things like that, where traditionally, the sites made money from fees and advertising. They weren’t online gambling enterprises here, where FanDuel and DraftKings described themselves with poker terminology.”

Another point that Schneiderman contends is the idea that DraftKings and FanDuel are doing a better job of policing themselves after the incident involving insider betting. However, Schneiderman clearly does not think the industry is doing a good enough job of self-regulation.

“Well, they clearly had not prior to this round of investigations by my office and others. They claim that they’re implementing new ones, but we really have no way of knowing since there’s no regulatory agency that supervises them. They’re not filing reports as other enterprises would. In New York State, we have a gaming commission that regulates pari-mutuel betting, for which there’s an explicit exemption from our state constitutional ban on betting. We just amended the constitution a couple of years ago to allow for a limited number of Las Vegas-style casinos. They will be subject to heavy regulation.”

Other issues that Schneiderman covers in the interview include his dislike for how DraftKings/FanDuel promote their deposit bonuses, and the assertion that nobody is addicted to DFS. See the entire interview here at PBS.