In the midst of football season, the big story for the past few months in the New York Times and other financial papers was the illegal insider trading held between the two leading fantasy football sites, DraftKings & FanDuel. New York Attorney General Eric Schneiderman declared yesterday that the daily fantasy sports online betting sites constitute as illegal gambling. Because of his ruling, Schneiderman has sent a cease-and-desist notice to both fantasy sports sites. This cease-and-desist notification is not just a financial blow to the billion-dollar fantasy sports industry, but also a setback to the notion of online gambling.
(To learn more about the press conference, please click here.)
DraftKings and FanDuel are two of the most popular daily fantasy sports-contest service providers. They are recognized to be two of the biggest leaders of the fantasy sports industry that allows customers to enter daily and weekly fantasy sports-related contest through bets on athletes or teams performances and results. The categories of sports include baseball, football, hockey, basketball, golf, soccer, NASCAR auto racing, and American college football and college basketball.
(Learn more about the rules and betting here.)
Since the beginning of October 2015, both sites have been under investigation. It was reported that due to an accidental post of confidential data by a DraftKings employee, various fantasy players and members were alerted of possible insider trading within the company. In addition, tension began to arise when word of the inquiry came about that DraftKings and FanDuel allowed their employees to play on each other’s sites with the unpublicized information. Because of these findings, the New York attorney general opened an inquiry into the fantasy sport site’s employees and overall operations. The result led the two industry fantasy gambling giants to stop accepting “wagers” from New York residents, claiming the overall activities to be illegitimate and unlawful. Schneiderman, however, did not ask the company to stop conducting its national business in New York.=
During the investigation, the daily fantasy sites have pointed to the Unlawful Internet Gambling Enforcement Act of 2006 to defend their legality claiming that their sites offered games of skill. But Schneiderman found that both DraftKings and FanDuel wages represent a wage on a ‘chance’ where winning or losing depends on a variety of elements moving past the skill level. Using those criteria, Schneiderman reasoned that individuals winning thousands or even millions were placing bets on events outside of their control of influence, similar in respect to the definition of gambling.
FanDuel respond with a statement that, “the game has been played legally (in New York) for years. It is a game that hundreds of thousands of people love and share with their friends, family, coworkers, and players across the country. We have operated openly and lawfully for several years. The only thing that changed today is the Attorney General’s mind.” DraftKings continued with a similar statement claiming the judgment to be from a, “hasty and uninformed opinion.”
(Watch fantasy sports gambling parody here.)
Regardless, Schneiderman expressed overall concerns about the online gambling industry and the negative impact that it had on the community as a whole. Currently, the trend against online gaming has become problematic throughout states. Just last month, a representative in Illinois put forth the first daily fantasy regulation bill with officials from New Jersey and Pennsylvania following their lead.
Time can only tell what will happen to both DraftKings and FanDuel. The only thing we can say is that it won’t be decided on chance.
from Sarang Ahuja http://ift.tt/1PoY3sr