FanDuel & DraftKings Banned from New York: Court

NEW YORK - Dec. 11, 2015 - PRLog -- A New York judge granted injunctions sought by the state's attorney general to bar DraftKings and FanDuel from doing business in the state.  Justice Manuel Mendez wrote in separate rulings issued Friday in New York Supreme Court that New York Attorney General Eric Schneiderman was within his authority to seek an injunction against the daily fantasy sites and granted the injunction.

Mendez ruled that Schneiderman's office established “the likelihood of success warranting injunctive relief” under Executive Law to avoid “fraudulent or illegal acts” under General Business Law.

“The NYAG has a greater likelihood of success on the merits under the New York State Constitution…” Mendez wrote, “and the definitions of gambling and ‘contests of chance’ as currently stated in Penal Law.”

The attorney general sought the injunction several weeks after the first class actions were filed against DraftKings and FanDuel that alleged both were operating illegal sports betting operations.

The class actions were filed by the law firms Napoli Law PLLC and Imbesi Law P.C., on behalf of bettors that wagered with FanDuel and DraftKings.  The law firms are seeking the return of all funds bet by DraftKings and FanDuel customers.

HANDICAPS (SPREADS) SET FOR EACH ATHLETE REDUCE OR ELIMINATE ELEMENT OF SKILL

Both FanDuel and DraftKings daily fantasy betting schemes require bettors to choose several players engaged in various sporting events.  Unlike season-long fantasy sports, both companies establish a handicap for each player selected.

Representatives for the industry admitted in a New York State Assembly Hearing that the handicaps are established by each company and are calculated using the projected performance of the athlete.  In calculating the handicap, the companies account for several significant variables, including playing time, weather, opponent strength and potential for injury.

“The act of establishing a handicap for each player is unique to daily fantasy sports and since the spread [handicap] accounts for various significant chance elements such as weather and projected performance…the element of skill is practically eliminated,” said Vincent Imbesi, an attorney with one of the law firms that filed the initial class actions alleging the illegal sports betting.

Wagering money on the performance of athletes based upon a system that uses handicaps (spreads) established by FanDuel and DraftKings renders their schemes illegal sports betting, the class action complaints allege.

STATES CANNOT REGULATE DAILY FANTASY SPORTS BETTING

Representatives from FanDuel and DraftKings are attempting to convince various state governments to regulate daily fantasy sports gambling or enact laws to make the schemes legal,” according to attorney Brittany Weiner, a partner of the law firm Imbesi Law P.C.  “States, excluding Nevada, Montana, Oregon and Delaware, are prohibited from legalizing sports betting because several federal laws expressly prohibit the legalization,” Ms. Weiner added.

BANKS INVOLVED IN FUNDING FANDUEL OR DRAFTKING ACCOUNTS ARE ENGAGING IN ILLEGAL MONEY LAUNDERING

Ms. Weiner said that the Professional and Amateur Sports Protection Act (PASPA) is the federal law which prohibits any state (except Nevada, Montana, Oregon and Delaware) from authorizing sports gambling — PASPA, 28 U.S.C. §§ 3701-3704.

PASPA makes it unlawful for any “person”:

“to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games”

Since DraftKings and FanDuel’s daily fantasy sports betting schemes involve wagering on the performance of athletes in one or more games, they violate the terms of PASPA and are illegal.  Processing payments for an operator in violation of PASPA will be deemed laundering money, according to Mr. Imbesi.

“Banks and financial processors involved in any part of the payment process utilized by DraftKings, FanDuel or any other illegal bookie should cease all operations if they have not already done so,” said Mr. Imbesi.

BANKS MUST REFUND MONEY CHARGED BY FANDUEL AND DRAKTKINGS CUSTOMERS

The Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) prohibits banks from lending money for illegal gambling.  “Lenders risk criminal charges and not being paid for any money charged by bettors to gamble on the schemes created by FanDuel and DraftKings – banks cannot claim they lacked knowledge the schemes were illegal if they conduct even minimal due diligence and especially after the injunction in New York,” Mr. Imbesi concluded.

FANDUEL AND DRAFTKINGS CONTINUE TO ALLOW BETTING ON COLLEGE ATHLETES

The class action complaints cites several examples of FanDuel and DraftKings continued use of college athletes in its gambling schemes, including the names and corresponding handicap spreads of hundreds of college students. FanDuel offers wagering on numerous student-athletes that play college football and basketball games, the complaint alleges and even uses pictures of college athletes on its website.

The law firms that filed the proposed class action complaint established www.fandueldispute.com and www.draftkingsdispute.com to provide individuals with additional information.

Media requests about the FanDuel lawsuit should be made to attorney Hunter Shkolnik of Napoli Shkolnik PLLC.

Hunter Shkolnik

Napoli Shkolnik PLLC
hunter@napolilaw.com
212-397-1000

Imbesi Law P.C. 450 Seventh Avenue, 14^th Floor New York, NY 10123 Attorney Advertising Napoli Shkolnik PLLC 1301 Avenue of the Americas New York, NY 10019