FanDuel and DraftKings Must Overcome New Hurdles in New York

Eric, Schneiderman, State Attorney of New York, has officially sued FanDuel and DraftKings, two fantasy sports websites for avoiding the New York Tax on gambling. FanDuel and DraftKings are both moderately new internet sites that allow participants to create a roster based on “skill” and modify this roster on a weekly, or daily basis.

Of the 882 registered voters of New York, 66% took a favorable stance by supporting outlawing the fantasy sports sites in New York. This move comes at the result of a recent flooding of advertisements from FanDuel and DraftKings on sports channels which target their ideal demographic. These channels include, but are not limited to: CBS, TNT, FOX, and most notably ESPN.

ESPN, in particular, has many segments on their website and on-air programs which are exclusively sponsored by DraftKings. It is unclear as to what the extent of these new sanctions will have on the relationship between ESPN and DraftKings. It is also unclear as to whether more states will fall in line with the stance New York has taken. However, Massachusetts has recently introduced similar legislation to bring into question the legitimacy of these fantasy websites.

According to Steve Greenberg, “Voters from every region think the Attorney General is right in calling these games gambling”. This comes at an interesting time, when it was revealed that 10% of DraftKings overall revenue is derived from the State of New York alone. Yet only 3% of New Yorkers have actually used one of the daily fantasy sites.

This calls into question not only the statistical variations of these polls, but perhaps sheds light on the overall scheme of these websites. According to these polls, the result would indicate that once a participant enters the world of fantasy sports, they choose to wager significant amounts of money over a period of time. Perhaps the amount of the average daily “wager” came into play whenever Schneiderman brought suit against the fantasy sports websites.

In appeals court, the judge upheld the previous decision restricting FanDuel and DraftKings’s ability to receive profits from New York. However, the companies are still allowed to operate in other states currently. The poll was conducted on Dec. 6 to Dec. 10. The margin of error is four percentage points. Regardless of your opinion or usage of these websites, I hope we can all agree that hopefully this litigation will result in less frequent advertisements that display misleading statistics and are intentionally highly repetitive.

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