New York Attorney General Eric Schneiderman (D) ruled this week that daily fantasy sports (DFS) has no place in his state and swiftly ordered market leaders DraftKings and FanDuel to exit his jurisdiction.
On Tuesday, Schneiderman gave the DFS operators cease-and-desist orders to immediately terminate the acceptance of wagers inside New York or face legal consequences.
“Our investigation has found that … daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers,” the attorney general said in a statement.
Bad as Poker
The entire national debate on daily fantasy sports essentially boils down to deciding if winning the contests takes skill, or if it’s simply luck.
Schneiderman argues the DFS wagers are more based upon chance than talent.
“Our review concludes that DraftKings’ (and FanDuel’s) operations constitute illegal gambling under New York law, according to which, ‘a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence,'” Schneiderman’s office wrote in its letters to DraftKings and FanDuel.
Scheniderman expands that “customers are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes.”
The investigation also said it found that roughly one percent of all DFS customers constitute the vast majority of winners across the two sites.
“In practice, DFS is far closer to poker … a small number of professional gamblers profit at the expense of casual players.”
Poker advocates have long stated their game of choice is also submerged in skill. Naturally, elements of chance also exist, but aptitude, strategy, and decision-making is far superior according to poker proponents.
One might also make the case that Schneiderman’s own conclusions support the claim that skill is heavily involved in both daily fantasy and poker.
“The investigation found that both companies consistently use deceptive advertising to lure consumers into an unregulated online gambling operation that, while marketed as a game that anyone can win, in fact distributes the vast majority of winnings to a small subset of experienced, highly sophisticated players,” Schneiderman says of DFS.
That begs the question, if it’s simply gambling, wouldn’t a more vast demographic be able to win the contests?
FanDuel certainly thinks so.
“Fantasy sports is a game of skill,” the DFS network responded. “We have operated openly and lawfully in New York for several years. The only thing that changed today is the Attorney General’s mind.”
In 2012, Brooklyn Federal District Court Judge Jack Weinstein agreed that poker is indeed a contest of skill. In an exhaustive 120-page ruling, Weinstein concluded, “Increased proficiency boosts a player’s chance of winning and affects the outcome of individuals hands as well as a series of hands.”
“Expert poker players draw on an array of talents, including facility with numbers, knowledge of human psychology, and powers of observation and deception.”