All bets are off in New York state for two highly lucrative fantasy sports companies.
State Attorney General Eric Schneiderman sent cease-and-desist letters on Tuesday to DraftKings and FanDuel, ordering them to stop operating in the state because, he said, they violate New York laws against illegal gambling.
In the letters, Schneiderman contends that the fantasy sports sites, which lure players with the promise of millions of dollars in prizes, are essentially based on luck — and because they are a type of gambling, they are illegal in the state.
"Like most gambling operations, DraftKings'/FanDuel's own numbers reveal a far different reality," according to the letters obtained by NBC News. "In practice, (daily fantasy sports) is far closer to poker in this respect: a small number of professional gamblers profit at the expense of casual players."
The companies are able to challenge the attorney general's order in court.
Boston-based DraftKings said it was "disappointed" with Schneiderman's "hasty action" and defended its online offerings as a game of skill.
"We strongly disagree with the reasoning in his opinion and will examine and vigorously pursue all legal options available to ensure our over half a million customers in New York State can continue to play the fantasy sports games they love," a DraftKings spokesperson said.
The company tweeted out a petition Tuesday afternoon telling fans to stand up against state officials.
FanDuel also tweeted a similar petition for players to respond to officials: "To anyone looking to end this game I say: Let us play!" (Comcast Corp., which owns NBCUniversal and NBC News, has invested in FanDuel.)
The New York order threatens to put the popular multibillion-dollar fantasy sports giants in limbo. The entire industry has been under mired in scandal after The New York Times revealed last month that employees may have access to insider data.
One DraftKings staffer, Ethan Haskell, had inadvertently released data from the company's "Millionaire Maker" contest that showed he had information not given to the public — providing him with a tactical edge. He reportedly won $350,000 playing on rival site FanDuel.
Schneiderman issued the following statement late Tuesday:
“Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers. Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.”