New York residents are once again free to wager on sporting events using two of the most popular daily fantasy sports sites, DraftKings and FanDuel
New York Governor Andrew Cuomo signed legislation on Wednesday saying that the sites fall under the category of “games of skill,” rather than games of chance that are illegal online. The new law places such sites under the purview of the New York State Gaming Commission, allowing the state to introduce regulations aimed at protecting consumers while collecting millions of dollars in fees from the sites.
“Daily fantasy sports have proven to be popular in New York, but until now have operated with no supervision and no protections for players,” Gov. Cuomo said in a statement. “This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections, and more funding for education.”
In a blog post, FanDuel CEO Nigel Eccles called the signing of the new legislation “a momentous day for the fantasy industry.”
The new legislation is in direct opposition with the opinion of New York’s Attorney General, Eric Schneiderman, who briefly won his fight to shut down daily fantasy sports sites, including DraftKings and FanDuel, earlier this year. Schneiderman contended that daily fantasy sports operations should be categorized as illegal gambling sites under New York’s laws, and the AG even accused DraftKings and FanDuel of deceiving their customers by misrepresenting their products.
In his own statement Wednesday, Schneiderman said he “will enforce and defend the new law,” but he isn’t letting DraftKings and FanDuel off the hook completely. “Our false advertising and consumer fraud claims for past misconduct by Draft Kings and Fan Duel will continue to move forward,” Schneiderman said.
Basically, the state is agreeing with the contention of sites like DraftKings and FanDuel that their users employ skill when creating imaginary teams consisting of real professional athletes while wagering on the strength of those athletes’ individual performances. Perhaps most importantly, though, the state’s press release added that the new law “will generate approximately $4 million in revenue to fund state education aid.”
The new legislation arrives just in time for New York’s professional football fans, as NFL teams are currently in their offseason training camps preparing for the start of the league’s new season in about a month. So, now, when the new season kicks off with the September 8th Super Bowl rematch between the Carolina Panthers and the Denver Broncos, New York residents can now legally to try to make a few bucks off the action.
While the new law is a big win for FanDuel and DraftKings in one of the country’s largest markets for sports fans, the sites aren’t completely out of the water yet, as they continue to throw large amounts of money at various legal battles in several other states. The New York Times notes that both sites plan to tweak their marketing efforts going forward, most likely to avoid running afoul of regulators like Schneiderman. Meanwhile, the two companies have also been the subjects of merger rumors, with Fortune even arguing at one point that DraftKings and FanDuel could join forces to defeat their legal problems and not have to also focus on competing with one another. But while a tie-up would make sense, the rumors were likely no more than speculation.