fb-pixel

Five takeaways from the DraftKings N.Y. rulings

Highlights from the court rulings Friday that first halted DraftKings' fantasy contests in New York, and then allowed them on emergency appeal:

• Clearly, this isn't the end: DraftKings' New York customers will get to play daily fantasy sports this holiday season, but there's no guarantee the fun will last. The company is appealing a court order that threatens to suspend its New York contests, and the appeals court said Friday that DraftKings could keep operating in the meantime. But it still has to deal with the underlying lawsuit from New York Attorney General Eric Schneiderman, who says daily fantasy sports amount to illegal gambling in the state.

Advertisement



• But it still isn't great for fantasy companies: DraftKings couldn't persuade the trial court to let it keep operating, and that will be seen as a blow to its legal arguments. Judge Manuel Mendez, who is presiding over the anti-gambling lawsuit, decided that Schneiderman was more likely to win the case. "The language of [state law] is broadly worded and as currently written sufficient for finding that [daily fantasy sports] involves illegal gambling," Mendez wrote.

• Financial companies are getting nervous: Bank of America said it was temporarily shutting off the flow of money from its New York cardholders. PayPal also said it was going to stop processing payments for fantasy sports in the state, but changed its stance after DraftKings got a reprieve from the appeals court. That reveals how skittish banks, credit-card networks, and payment processors can get when the courts start ruling on gambling issues.

• The trial judge rejected some key legal arguments: DraftKings and FanDuel pointed to a federal anti-gambling law and a New Jersey federal court ruling to help make their case against Schneiderman. The New York judge essentially said those two arguments didn't matter, since the companies were asking that Schneiderman be stopped from enforcing New York state laws against them.

Advertisement



• DraftKings' lost business wasn't convincing: DraftKings said that losing access to the New York market would be "devastating" to its business, given that it's collected about $100 million so far this year in entry fees from players in the state. The judge said that potential harm to people, especially those with gambling addictions, was of more serious concern.

"Fanduel, Inc. and DraftKings, Inc., are only enjoined and restrained in the State of New York, [daily fantasy] is permitted in other states, and the protection of the general public outweighs any potential loss of business," Mendez wrote.


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