Business

New York AG wants DraftKings, FanDuel to give back money

New York State Attorney Eric Schneiderman spoke during a Law Day event at the Court of Appeals in Albany, N.Y.

Hans Pennink/AP/FILE

New York State Attorney Eric Schneiderman spoke during a Law Day event at the Court of Appeals in Albany, N.Y.

New York’s attorney general now wants the country’s top daily fantasy sports companies to give back the millions of dollars they’ve collected from players in the state.

The new demand, filed with a state court on New Year’s Eve, is the latest twist in a complicated legal battle between New York Attorney General Eric Schneiderman and the country’s biggest fantasy companies, DraftKings Inc. and FanDuel Inc.

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Schneiderman has sued the two, saying their games are illegal under New York gambling laws. In his latest court filing, the attorney general asked a New York court to force DraftKings and FanDuel to “make restitution of all funds obtained from consumers” in the state.

That could be a huge sum: New York is one of the largest markets for daily fantasy sports players, and DraftKings has said that it collected about $100 million in entry fees there in 2015 alone. It’s not clear how much FanDuel collected from New Yorkers last year. The two companies represent more than 90 percent of the daily fantasy sports market.

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In a statement, DraftKings lawyer David Boies said the new demands are based on a “fundamental misunderstanding of fantasy sports competitions.”

“The attorney general’s revised complaint reveals that the attorney general’s office still does not understand fantasy sports,” Boies said. FanDuel did not immediately respond to messages seeking comment.

Most of the money contestants submit as entry fees are paid back in the form of prizes, which can exceed $1 million in the biggest contests.

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DraftKings and FanDuel have disputed Schneiderman’s allegations, arguing the games are legal contests that rely more on a player’s skill than random chance. The companies have filed their own lawsuits attempting to block Schneiderman from shutting them down.

New York is one of several states questioning whether DraftKings and FanDuel violate state anti-gambling laws.

Massachusetts Attorney General Maura Healey has said fantasy sports played for cash are not explicitly illegal under state law, but she has proposed a sweeping set of consumer-protection regulations that include restrictions on advertising and a ban on players under 21.

The underlying lawsuit against DraftKings and FanDuel is currently on hold while an appeals court decides whether the companies should have to halt their contests during the court case.

Schneiderman also accuses DraftKings and FanDuel of misleading consumers with advertising for “bonus” programs that promise players rebates of the fees they pay to enter fantasy games. Players have made similar complaints in private lawsuits filed against the companies.

This story was updated with a revised statement from DraftKings on Jan. 1 at 3:30 p.m.

Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.
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