Appeals Court Lets FanDuel, DraftKings Operate In N.Y. — For Now

A New York state appeals court is temporarily allowing daily fantasy sports sites FanDuel and DraftKings to continue operating in the state, blocking a lower court's ruling to bar the websites that was handed down earlier in the day.

The order allows the companies to continue business while the issue is fully considered, at least through next month, the Associated Press reports.

State Attorney General Eric Schneiderman filed an enforcement action in New York State Supreme Court on Nov. 17, seeking a preliminary injunction against the fantasy sites that allow players to compete against each other for money.

Friday morning, Supreme Court Justice Manuel J. Mendez barred DraftKings and FanDuel from "accepting entry fees, wagers or bets from New York consumers in regards to any competition, game or contest" on the websites.

The attorney general's motion had cited New York's ban on bookmaking and other forms of sports gambling that have stood since 1894.

"So-called Daily Fantasy Sports ('DFS') wagers fit squarely in both these definitions," Schneiderman's memorandum reads, "though by meeting just one of the two definitions DFS would be considered gambling. DFS is nothing more than a rebranding of sports betting. It is plainly illegal."

Update at 11:20 a.m. ET: DraftKings 'Disappointed'

David Boies, counsel to DraftKings, has issued a statement about the injunction:

"We are disappointed with the Court's decision, and will immediately file an emergency notice of appeal in order to preserve the status quo.

"Daily Fantasy Sports contests have been played legally by New Yorkers for the past seven years and we believe this status quo should be maintained while the litigation plays out."

Original post continues:

Federal and congressional authorities have also been looking at the sites' business model to see if it runs afoul of U.S. gambling laws.

In addition to those challenges, the sites also face a legal threat from NFL players. From our post on that development in October:

"Washington wide receiver Pierre Garcon has filed a class-action lawsuit on behalf of NFL players against the daily fantasy sports site FanDuel, alleging it misuses players' names and likenesses without proper licensing or permission."

Earlier in that same month, DraftKings and FanDuel moved to reassure their customers, after questions emerged about whether an employee of one site used inside information to win thousands of dollars on the other site.

As the Two-Way reported:

"Daily fantasy sites such as FanDuel and Draft Kings offer customers the chance to assemble a fantasy team roster (with a salary cap) that they then pit against other contenders. Some games are free to enter; others require buy-ins that range from $3 to $20 and up, with first-place payouts that top $1 million."