Judge upholds order banning daily fantasy sports sites in N.Y.

An ad for daily fantasy sports operator DraftKings is displayed in a subway station in Philadelphia on Dec. 1.
An ad for daily fantasy sports operator DraftKings is displayed in a subway station in Philadelphia on Dec. 1. AP

A New York judge upheld Friday the state attorney general’s injunction barring daily fantasy sites from operating in the state.

Last month, the attorney general, Eric T. Schneiderman, had ordered the biggest fantasy companies, DraftKings and FanDuel, to stop taking bets in the state; both companies filed formal complaints against the action.

A lawyer for DraftKings told Reuters the company would appeal Friday’s decision.

A key issue facing the judge was whether the competitions are games of chance, or skill. Kathleen McGee, lawyer for the state, argued that daily fantasy sports contests were clearly gambling because they depended on the outcome of events out of bettors’ control: a fumble, a batting slump, a dropped ball, an injury or rain.

“I place my bet, pick my team and watch television,” she said. “Chance pervades daily fantasy sports.”

Rather than betting on games directly, players pay an entry fee and select teams of players. McGee said this was really just another form of betting.

“If someone set up a website that allowed people to make millions of bets on the outcome of spelling bees, that would be gambling,” McGee said.

John Kiernan, representing FanDuel, argued that daily fantasy sports was not gambling at all.

“What is skill?” he said. “It’s when through effort and aptitude you increase your probabilities of success.”

David Boies, representing DraftKings, pointed to statistical analysis that a handful of players win most of the money.

“If most people lose money and the same people continue to win repeatedly, that is absolute proof that this is a game of skill and not of chance,” he said.

Fantasy sports companies have also contended that their games are legally sanctioned by a 2006 federal law that exempt fantasy sports from a prohibition against processing online financial wagering.

The ruling was a major setback in the sites’ largest market — with more than 1.2 million customers, New York accounts for more than 12 percent of players, according to Eilers Research. Schneiderman has expanded his investigation to include Yahoo, which is a relatively small player in the market.