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DFS giants reach compromise agreement to withdraw paid contests from New York

Daily fantasy sports (DFS) operators DraftKings and FanDuel have reached a compromise with New York Attorney General Eric Schneiderman, which will see the companies withdraw their paid-contests from the state with immediate effect.

The compromise agreement will see each company withdraw their core product from New York until there is a change in the state’s gambling law, or until they can successfully argue the legality of DFS at an appellate hearing due to take place in September.

Both companies will also drop their legal action against Schneiderman, while the AG will drop all illegal gambling claims against the two in return.

However, Schneiderman will still be able to pursue cases involving allegations of false advertising, which could ultimately see FanDuel and DraftKings forced to repay users that lost money playing its real-money fantasy contests.

The agreement also includes a provision to drop all cases should New York law be changed to specifically legalise DFS. Several differing bills are currently active in the state legislature, which runs until June. Two bills would class DFS as a form of gambling, while another two would specifically exempt it from legislation relating to games of chance. Another bill looks to amend the state constitution to allow paid fantasy contests.

“I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter,” Schneiderman said of the agreement.

“As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. Today's agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division.

“Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”

DraftKings thanked its players in the state, and pledged to continue fighting for DFS legistlation: “We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years.

“We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.”

FanDuel added that New York was a “critical” state, with the company headquartered in Manhattan and employing “more than 170 young, smart, passionate fans who are committed to innovating and providing the best fantasy experience possible.”

“We are proud to be one of New York’s largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York,” it explained.

FanDuel added that New Yorkers will now be unable to deposit funds or enter paid contests, but can withdraw existing balances at any time, as has always been the case. All contests that are already live and active will take place as planned.

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