New York (AFP) – Accused of running competitions that amount to illegal gambling, fantasy sports operators FanDuel and DraftKings announced Monday that they would halt their paid daily contests in New York.
The two companies said the move was part of a settlement with the state’s attorney general covering some but not all of the state’s charges against them.
As of Monday, “New York is a restricted state and users located in the state will not be able to deposit funds or enter paid contests,” FanDuel said in a statement.
DraftKings, its rival in the multibillion-dollar business that exploded across the country last year, said it will stop offering paid daily fantasy contests in the state as well.
The moves came as both companies faced accusations that their business, which offers huge prizes for winners of its online competitions between fantasy sports teams, constituted unlicensed gambling, and also defrauded players.
Both companies allow players to create virtual teams using real athletes and compete with other such teams based on the real-world performance of those athletes.
As the business took off last year with the support of major sports leagues, New York Attorney General Eric Schneiderman moved to shut them down and have them give back money earned in the state.
“I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State,” Schneiderman said in a statement Monday.
“Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”
He added that the deal with the two companies will create room to resolve the issue in court of whether their fantasy sports competitions are legal or whether they need a change in the law to become so.
Both companies have also been challenged in Nevada, home to the gaming capital of Las Vegas, and Illinois.
New York-based FanDuel said it was “disheartening for us to restrict access to paid contests in our home state,” but added that doing so was necessary while it pursues a court ruling in its favor.
DraftKings, based in Boston, pledged to “continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.”