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DraftKings: Appeal Against New York Attorney General's Preliminary Injunction

February 27, 2016

DraftKings Officially Files Appeal Against New York Attorney General’s Preliminary Injunction

Daily Fantasy Sports giant DraftKings is fighting back against a preliminary injunction that would bar the company from operating in the state of New York. On Monday, February 22, DraftKings filed its appeal, in which it claims New York Attorney General Eric Schneiderman failed to meet the burden of proof necessary to justify the injunction. The company claimed Schneiderman “did not come close” to proving that fantasy sports are either technically gambling, or even harmful to society.

In its appeal, DraftKings writes, “The court applied the wrong legal standard, and ignored the undisputed evidence, in finding that daily fantasy sports contests are games of chance.”

Instead, DraftKings claims DraftKings says Schneiderman’s case made more emotional arguments than logical ones. “Rather than identify the concrete and immediate harms necessary to obtain a preliminary injunction, the NYAG instead resorted to conclusory attacks and speculation, stretching to tie DFS contests to everything from child abuse to overeating, among other things.”

“DFS contests have been offered openly, honestly, and permissibly in New York for nearly a decade”, continued DraftKings, ”and if the NYAG had actual evidence that they caused imminent public harm, he would have identified it to the trial court. There is none--which is sufficient reason alone to vacate the preliminary injunction order.” (Emphasis present in original text.)

DraftKings cited Humphrey v. Viacom, Inc., a case from 2007, claiming, “the only court to have addressed [Daily Fantasy Sports legality] reached the opposite conclusion” as New York courts. In Humphrey v. Viacom, plaintiff Charles E. Humphrey sought to reclaim all losses incurred during “illegal” gambling contests in which entry fees constituted wagers, invoking certain states’ gambling loss recovery statutes. The case was dismissed, and the verdict read as such:

“The success of a fantasy sports team depends on the participants' skill in selecting players for his or her team, trading players over the course of the season, adding and dropping players during the course of the season and deciding who among his or her players will start and which players will be placed on the bench.”

Schneiderman appeared confident and ready for the fight. “We look forward to demonstrating to the Appellate Division, as we have to the trial court, that DraftKings and FanDuel should be prohibited from illegally taking bets in New York State,” said one of Schneiderman’s spokespersons. On November 19 of last year, Schneiderman wrote an editorial to the New York Daily News, in which he gave reasons outside of what DraftKings detailed in its appeal: namely that DraftKings was founded by seasoned businessmen from the United Kingdom’s digital gambling industry, and that “89% of one site’s players are losers, despite seemingly endless TV ads promising easy money.”

In addition, Schneiderman wrote, “we have heard from experts that daily fantasy sports players are increasingly showing up in Gamblers Anonymous meetings and the offices of addiction counselors.”

DraftKings and FanDuel, which have fought Schneiderman’s injunction since last November, were given an emergency stay and allowed to operate until the conclusion of their appeal, which is scheduled to occur in the spring.

 


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