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"No More Bets": New York Shuts "Illegal Gambling" Fantasy Sports Sites

Tyler Durden's picture




 

A little less than a month ago, Nevada shut down fantasy sports sites, effectively telling the likes of DraftKings and FanDuel to apply for a gaming license or face a decade in prison.

As we noted at the time, the move came on the heels of an announcement by the FBI and the Justice Department that the US was investigating whether the business models of daily fantasy-sports sites violate a Congressional exemption around the legality of transfers from financial institutions to online gambling sites.

Sites like DraftKings and FanDuel rely on a loophole for “games of skill" which effectively allows them to say that betting on the “skills” of others is itself a “skill.”

 That is, if I know more about how the skills of say, one NFL player stack up against the skills of another NFL player, well then I too have a “skill”, and so therefore, sites which pay me to play my skills against the skills of other fans can exploit a Congressional exemption on financial companies transferring money to online gambling sites.

Obviously, that's a ridiculous loophole and it looks like everyone who isn't getting their cut (i.e. state and local goverments) have had just about enough of it because now, New York attorney general Eric Schneiderman is set to shut down FanDuel and DraftKings in NewYork. Here's The New York Times:

The New York State attorney general on Tuesday ordered the two biggest daily fantasy sports companies, DraftKings and FanDuel, to stop accepting bets in New York, saying that their games constituted illegal gambling under state law, according to people with knowledge of his investigation.


The cease-and-desist order by the attorney general, Eric T. Schneiderman, is a major blow to a multibillion-dollar industry that introduced sports betting to legions of young sports fans and has formed partnerships with many of the nation’s professional sports teams. Given the New York attorney general’s historic role as a consumer-protection advocate, legal experts say the action will most likely reverberate in other states where legislators and investigators are increasingly questioning whether the industry should operate unfettered by regulations that govern legalized gambling.


Fantasy sports companies contend that their games are not gambling because they involve more skill than luck and were legally sanctioned by a 2006 federal law that exempted fantasy sports from a prohibition against processing online financial wagering. That view is increasingly being challenged as fantasy sites have begun offering million-dollar prizes and bets on individual sports, such as golf, mixed martial arts and Nascar races, magnifying the element of chance and making the exemption more difficult to defend.


On Tuesday afternoon, as news of the attorney general’s order began to trickle out, DraftKings sent an email to its players, saying, “Attorney General Eric Schneiderman is considering preventing New Yorkers from playing daily fantasy sports,” and added: “Hey, New York, protect your right to keep playing daily fantasy sports. Contact the attorney general today!”


Sabrina Macias, a spokeswoman for DraftKings, said: “We’re disappointed he hasn’t taken the time to meet with us or ask any questions about our business model before his opinion.” She said the company had 500,000 users in New York State.


In a statement, FanDuel said: “Fantasy sports is a game of skill and legal under New York state law. This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country.”

Right FanDuel, that's exactly what this is and we're not sayng that's at all justified, but you shouldn't exactly be surprised.

Frankly, this is a lot like multi-level marketing or (gasp) selling drugs. That is, it's not that it necessarily should be illegal - after all, in a free society people should be allowed to do as they please with their money and their free time - but the fact is that it ultimately is illegal, which means that when you've gotten away with it for years, you can't really play the "what's going on here?!" card as though you had no idea this was coming. 

Anyway, weigh in as you will, but right or wrong the government is out to put an end to this industry and if you're a betting man (or woman) we wouldn't recommend wagering on FanDuel or DraftKings being able to fend this off.

From here on out, please just stick to such legalized, and "regulated" gambling at the state lottery, and the stock market of course.

In short.. "All. Bets. Are. Off"...

 

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Tue, 11/10/2015 - 19:55 | 6774792 Looney
Looney's picture

... No... More... Bets...

Tic… Tac… Toe fungus   ;-)

Looney

Tue, 11/10/2015 - 19:57 | 6774819 quintago
quintago's picture

ha sorry VCs who dumped all the money in. Preying on a bunch of high school and college kids.

Tue, 11/10/2015 - 20:00 | 6774828 A Nanny Moose
A Nanny Moose's picture

How is this predatory? All of this shit is voluntary. If the kids are not wise enough to understand the risks, then who was responsible for their education? Where are their parents?

Government doesn't like it when other people make money....and it ain't voluntary.

Tue, 11/10/2015 - 20:08 | 6774870 NoDebt
NoDebt's picture

If there's one area that the US is woefully behind the rest of the world it's in banning things.  But we're catching up quick.

 

Tue, 11/10/2015 - 20:18 | 6774916 johngaltfla
johngaltfla's picture

However it is still okay for New Yorkers to demand the rest of the nation bail out their piece of crap largest city.

Tue, 11/10/2015 - 20:44 | 6775039 pods
pods's picture

To anyone left in that wretched shithole, all together now:

"I, Love Neeeew York!"

pods

Tue, 11/10/2015 - 20:47 | 6775063 Herd Redirectio...
Herd Redirection Committee's picture

Got to grease the right palms, give a cut to the right people, before you can run a successful business in the USSA!

Tue, 11/10/2015 - 20:58 | 6775114 cougar_w
cougar_w's picture

Internet geeks, we don't really understand how all that works. It's the Internet, it's okay, is the attitude.

Tue, 11/10/2015 - 22:17 | 6775484 TruxtonSpangler
TruxtonSpangler's picture

"I aint buyin that"

"Thats funny, I aint sellin"

Tue, 11/10/2015 - 21:13 | 6775184 False_Profit
False_Profit's picture

...and yet wall street still breathes, proving that gambling is only legal in government (read bankster) owned enterprises...

Tue, 11/10/2015 - 22:34 | 6775530 Took Red Pill
Took Red Pill's picture

State lotteries are gambling, too. How is that legal?

Tue, 11/10/2015 - 23:02 | 6775641 Tom Servo
Tom Servo's picture

The state gets a cut... capiche?

 

That's a nice fantasy football site you have there.  It would be a shame for anything to happen to it, if you catch my drift...

 

Tue, 11/10/2015 - 22:15 | 6775476 Semi-employed W...
Semi-employed White Guy's picture

New Yorkers are fond of saying they get back less in federal spending than they pay in taxes. The truth is that the island of Manhattan produces absolutely nothing of value.  Its so-called "industry", the financial industry, is one large parasite on the butt of the nation.  They leach off of our retirement funds.  We are essentially forced to invest in 401Ks if we want relief from the IRS, so the brokerages in Manhattan get money they otherwise would not.  Fuck the Fed, the IRS and the entire DC-Manhattan axis of evil.

Tue, 11/10/2015 - 20:20 | 6774928 NihilistZero
NihilistZero's picture

Why don't they just start exclusively taking bets in Bitcoin?

Tue, 11/10/2015 - 20:56 | 6775100 cougar_w
cougar_w's picture

... or move the servers off-shore. Like, Monaco. 

Tue, 11/10/2015 - 20:17 | 6774905 Groundhog Day
Groundhog Day's picture

"preying on a bunch of high school and college kids"

ha

you mean like when all the credit card companies line up at freshman orientation to hand out credit card application like lollipops for free bags and water bottles

maybe their should be a class they have to take before taking out a credit card

Tue, 11/10/2015 - 20:37 | 6775000 A Nanny Moose
A Nanny Moose's picture

...or Selective Service?

Tue, 11/10/2015 - 21:33 | 6775282 sandhillexit
sandhillexit's picture

Sheldon Adelson protecting the country's morals?  his franchise?     

Tue, 11/10/2015 - 23:16 | 6775673 Neil Patrick Harris
Neil Patrick Harris's picture

And help the deep state prop up the petrodollar? fuck. that.

Tue, 11/10/2015 - 20:06 | 6774856 junction
junction's picture

Attorney General Eric Schneiderman is the worst POS to be New York AG since Dennis Vacco.  Even former AG Cuomo shines in comparison to Schneiderman, whose specialty is going after people who have jobs and also collect Unemployment Insurance benefits.  You notice that Eric leaves alone the criminals who are members of the State Senate and Assembly.  When there were news reports how for $10, the Port Authority sold its World Trade Center trademarks to a PA insider 30 years ago, trademarks worth millions then, Schniederman found nothing wrong after his investigation in 2014.  Currently, Uber is operating in New York with drivers who do not have workers compensation.  Owners of small busineses in New York who don't have workers compensation are routinely charged by AG Schneiderman with criminal offenses for not having comp.  Not Uber.  Schneiderman should resign and do what he wants to do most, write a book on Judge Mayer's sealed report of the 1971 Attica prison uprising.  What a mental defective Schneiderman is, which is why the Democratic crooks in Albany picked him for AG. 

Tue, 11/10/2015 - 21:47 | 6775348 stocktivity
stocktivity's picture

Yet they allow the rigged stock market casino to operate with no restrictions to keep the top 1% in the money.

Wed, 11/11/2015 - 02:08 | 6776075 The central planners
The central planners's picture

Stawk "market" ? I rather to play the lottery in Ilinois.

Tue, 11/10/2015 - 19:52 | 6774799 Normalcy Bias
Normalcy Bias's picture

I've never been able to figure out how while betting on Fantasy Sports wasn't gambling, betting the spread or moneyline on a game was...

Tue, 11/10/2015 - 19:58 | 6774826 Implied Violins
Implied Violins's picture

This will all be resolved once the 'middle men' get their cut. Just watch.

Tue, 11/10/2015 - 20:03 | 6774842 A Nanny Moose
A Nanny Moose's picture

Politicians are not middlemen. They are welfare queen leeches, who were simply paid more money by the gambling competition, to shut this shit down.

Tue, 11/10/2015 - 20:06 | 6774864 JustAboutThatAc...
JustAboutThatActionBoss's picture

Leave em the Fuck alone. If someone wants to use their skill to figure out Gronk against the Jags is better than Witten against the seahawms then let em put their money down. No different than VRX vs LLY....

 

Fucking  asshole politicians just want a new tax source

 

Go away

Tue, 11/10/2015 - 20:46 | 6775051 PrintemDano
PrintemDano's picture

Bingo.

Tue, 11/10/2015 - 21:11 | 6775175 Rektors
Rektors's picture

And Bingo was his namo!

Tue, 11/10/2015 - 21:33 | 6775280 A Nanny Moose
A Nanny Moose's picture

That's gambling too. It will require a license from The State.

Tue, 11/10/2015 - 21:38 | 6775300 Rikky
Rikky's picture

while true on the new tax source all they're saying is this should be regulated like any other gambling enterprise.  now the whole regulatoin thing is another piece of shit but still they are being consistent.

Tue, 11/10/2015 - 20:20 | 6774846 Ignatius
Ignatius's picture

Easy.  Because, see, the one corrupts our morals, see, and the other doesn't.  Oh, and that bribe thingy, gotta be sure you cover that end.

Tue, 11/10/2015 - 20:01 | 6774808 nmewn
nmewn's picture

lol...and the MSM wants you to believe New York government is "liberal"?...lmao!!!

Let's see, what have they banned or tried to ban over the years...smoking (hell, the cops apparently strangle people for selling loosies on the sidewalk up there) 32oz soft drinks, politically incorrect speech, guns, driving a car...have I missed anything? ;-)

Tue, 11/10/2015 - 20:04 | 6774857 A Nanny Moose
A Nanny Moose's picture

Laws of Physics?

Tue, 11/10/2015 - 20:10 | 6774879 nmewn
nmewn's picture

Yep. They seem to think anyone making a profit should be TAXED TO DEATH unless of course they work on Wall Street.

Real Stock Mawkit Einsteins, every last one of them ;-)

Tue, 11/10/2015 - 20:28 | 6774955 CzechNorris
CzechNorris's picture

I looked into buying bitcoin. Read the fine print, and discovered that NY requires the site to report any transactions over $3K.  Good God, I need to get out of this state.

Tue, 11/10/2015 - 19:55 | 6774810 VegasBob
VegasBob's picture

Good riddance.  Now we need to have the New York Attorney General outlaw Wall Street gambling, er, 'investing'...

Tue, 11/10/2015 - 19:56 | 6774812 stant
stant's picture

Go buy a lotto ticket damit , they need the money

Tue, 11/10/2015 - 20:15 | 6774868 Normalcy Bias
Normalcy Bias's picture

Hey, if you don't play, you can't not win!

Tue, 11/10/2015 - 20:38 | 6775017 A Nanny Moose
A Nanny Moose's picture

Just think of the Children!!!

Tue, 11/10/2015 - 19:56 | 6774816 Sleepless Knight
Sleepless Knight's picture

Who gives a rats ass.

Tue, 11/10/2015 - 19:57 | 6774822 major major maj...
major major major major's picture

I bet with my skill of knowing the skills the Fed has to prop up the stawk mark

 

 

Tue, 11/10/2015 - 20:08 | 6774872 kaboomnomic
kaboomnomic's picture

That govt don't understand internet.

That company? Just move to cayman's island or others like.

DNS & IP-routing don't care WHERE those gambling servers located.

Use cloud services? (They are VERY CHEAP nowdays) and goodluck trying to block it.

But... govt rarely smart these days..

Tue, 11/10/2015 - 20:36 | 6774994 Bangin7GramRocks
Bangin7GramRocks's picture

Good try. If you can't legally digitally transact the funds to gamble or pay off, then you are sunk. And if you are that much of a fucking loser that you will jump through Internet hoops to waste money on fantasy football, kill yourself!

Tue, 11/10/2015 - 20:54 | 6775092 PrintemDano
PrintemDano's picture

Where ther's a will there's a way.

Tue, 11/10/2015 - 21:14 | 6775191 insanelysane
insanelysane's picture

Bangin is 1000% correct which is how online poker was killed.  It is illegal for US banks to do transactions.

Tue, 11/10/2015 - 22:05 | 6775418 PrintemDano
PrintemDano's picture

I stand by my statement as there are some who still play online poker and manage to get paid when they win.  Not me of course as I would never disobey my governments wishes.  For every roadblock the G men put up there is a way around it.

Tue, 11/10/2015 - 20:45 | 6775047 A Nanny Moose
A Nanny Moose's picture

But... govt rarely smart these days..

Don't need smart when you have all the guns. Great example of govt action resulting in outsourcing.

Tue, 11/10/2015 - 20:08 | 6774873 Sanity Bear
Sanity Bear's picture

Big mistake by the government. This is the kind of thing that makes Joe Beerswiller pay attention to heavy handed government regulation.

Tue, 11/10/2015 - 20:29 | 6774959 Sages wife
Sages wife's picture

Uuuurp..you know what yer prolem is...I oughtta...zzzz.

Tue, 11/10/2015 - 20:16 | 6774878 NuYawkFrankie
NuYawkFrankie's picture

If these Gaming Sites would just see reason - and cut in NYC & NY State on a piece of the action - or throw a few shekels in GruppenFuhrer Schneiderman's direction - I'm sure this situation could be "resolved" quickly and amicably

Tue, 11/10/2015 - 20:18 | 6774914 nmewn
nmewn's picture

+100 and I'll take the points, thats really all it is isn't it? 

And the fucking progs all laughed at me when I said "government is nothing more than the largest criminal enterprise on the block"...lol...so, whats the New York Mega Millions lottery jackpot up to, looks like $180,000,000.

All sanctioned by "the state", inducing "the folks" to GAMBLE (gasp!...lol)

The largest criminal enterprise ;-)

Tue, 11/10/2015 - 21:30 | 6775045 NuYawkFrankie
NuYawkFrankie's picture

re government is nothing more than the largest criminal enterprise on the block

Tell me about it!
I got a letter a few years back from those scumbags up in Albany claiming I owed NY State about $2grand from 4 or 5 years prior.

I arranged to "accidently" meet "a friend of a friend" who worked for NYS and, after plying him with booze, he told me they send those letters out at random - and a lot of suckers just pay up, not wanting any hassle or adverse credit ratings etc.

I sent 'em my returns - and a copy of the cancelled checks-whcich I'm sure they wee hoping I no longer had - and they said they'd "look into it". Never heard back after that - not even that the "case" was closed -Do u believe this sh!t???

Tue, 11/10/2015 - 22:54 | 6775610 SokPOTUS
SokPOTUS's picture

Pfft. They'll never close the case. They'll just wait til you croak and present the same bill to your Executor of your Estate. That bill will get paid, and with full penalties plus interest, otherwise your Estate will never get disbursed to your Heirs.

Your only hope of ditching that tax bill is to die penniless.

Tue, 11/10/2015 - 20:48 | 6775066 A Nanny Moose
A Nanny Moose's picture

$180,000,000?!?! Just think of all the taxes I could pay with that?!?!

Can I get that in an IOU?

Tue, 11/10/2015 - 20:33 | 6774981 CunnyFunt
CunnyFunt's picture

A tax warning: Don't leave any footprint in New York State, unless you've paid your dues.

Tue, 11/10/2015 - 20:11 | 6774885 Able Ape
Able Ape's picture

Only the FED is allowed to pick your pocket and steal your money - all competition is strictly VERBOTEN!  

Tue, 11/10/2015 - 20:16 | 6774900 Secret Weapon
Secret Weapon's picture

The government hates competition.

Tue, 11/10/2015 - 20:16 | 6774901 logicalman
logicalman's picture

You are supposed to gamble in the stock 'market' FFS.

 

Tue, 11/10/2015 - 20:17 | 6774906 coast
coast's picture

Isn't the stock market gambling?   Does djia casino have a gambling license?

Tue, 11/10/2015 - 20:18 | 6774919 BustainMovealota
BustainMovealota's picture

LOL, you don't have mob buyin you ain't making it

Tue, 11/10/2015 - 20:19 | 6774923 bobthelob
bobthelob's picture

Just tried to withdraw my account balance from DK and got "please contact customer service".

Look like the redemption gates are up.

Tue, 11/10/2015 - 21:24 | 6775240 Seasmoke
Seasmoke's picture

OUCH. But dont worry Schneiderman will get you 2cents on the $. He will split the rest with Cuomo. Its for your own good.

Wed, 11/11/2015 - 00:02 | 6775812 PN7
PN7's picture

Nevada made it illegal a month ago.  I got my money back from FanDuel, but after a month of trying, I still have not got a decent response from Draft Kings.  So good luck but don't count your chickens.

Tue, 11/10/2015 - 20:32 | 6774973 Bangin7GramRocks
Bangin7GramRocks's picture

This is the real question. How is fantasy sports betting gambling, but Wall Street betting not gambling? Inquiring minds want to know.

Tue, 11/10/2015 - 20:50 | 6775079 A Nanny Moose
A Nanny Moose's picture

Follow the money.

Tue, 11/10/2015 - 20:54 | 6775091 cougar_w
cougar_w's picture

^^^^ this

Tue, 11/10/2015 - 20:58 | 6775113 mijev
mijev's picture

Even worse, there are actually elements of luck and skill in traditional gambling whereas winning on Wall Street just relies on who you know and how much money you have.

Tue, 11/10/2015 - 20:33 | 6774978 Sages wife
Sages wife's picture

Next it will be retro-active.

Tue, 11/10/2015 - 20:35 | 6774985 Colonel Klink
Colonel Klink's picture

Fuckem both.  Masters of skimming.  I wouldn't doubt if their creators were tribal.

Tue, 11/10/2015 - 20:39 | 6775006 THE COIN
THE COIN's picture

I play FanDuel. 6 times this year i've finished in the top 1% of that weeks game. But i have to say that there is a little unfair advantage. i've trained over 30 athletes that ere chosen in the 1st round of the NFL Draft. And multiple Olympic Medal Sprinters. So there is skill involved, but there is a tilt to the field.

Tue, 11/10/2015 - 21:19 | 6775212 Bangin7GramRocks
Bangin7GramRocks's picture

It's exactly like poker. There is skill, but it's mostly luck and certainly gambling. I'm no puritanical douche, but let's be consistent and call it what it is.

Tue, 11/10/2015 - 20:39 | 6775022 Cult of Criminality
Cult of Criminality's picture

So they closed the NYSE ?

Tue, 11/10/2015 - 20:53 | 6775088 cougar_w
cougar_w's picture

Horse racing.

Tue, 11/10/2015 - 20:59 | 6775120 PrintemDano
PrintemDano's picture

Oh the evil state of NY gets a big fat cut of that....

Tue, 11/10/2015 - 22:28 | 6775509 SillySalesmanQu...
SillySalesmanQuestion's picture

They didn't close the NYSE, they just moved it to Aqueduct for the winter...
Something about more hookers, blow, slots and trifecta wagering.

Tue, 11/10/2015 - 21:12 | 6775177 PoasterToaster
PoasterToaster's picture

At some point people just stop listening to that next crony rule being shoved down their throats.  Then the scam of the State is exposed for what it is and loses its legitimacy.

That's why Americans are not Europeans.

Tue, 11/10/2015 - 21:45 | 6775194 NuYawkFrankie
NuYawkFrankie's picture

My advice to these Gaming Sites?
1) Put in a call to Hillary. Ask "How much?"
2) Make check in said-amount (+10% "Handling Fee") payable to the Clinton Foundation

Tue, 11/10/2015 - 21:21 | 6775223 Seasmoke
Seasmoke's picture

I just want to say. Eddie Lacey is a fat fucking POS

Tue, 11/10/2015 - 21:33 | 6775278 Bangin7GramRocks
Bangin7GramRocks's picture

Holy shit! At least you said it. I play in a low dollar fun league with old college buddies and I drafted that lazy cunt with the third pick. Fuck him in the other ear!

Tue, 11/10/2015 - 21:47 | 6775342 duck dodgers
duck dodgers's picture

 They're playing with fire now. You dont fuck with the sheeples sports!

Tue, 11/10/2015 - 21:49 | 6775357 FreeNewEnergy
FreeNewEnergy's picture

In New York related news, Governor Cum on today announced that all state employees would make a minimum of $15 per hour.

Thanks, guv, you fucking cunt. Moar taxes for the rest of us.

Cuomo to Create $15 Minimum Wage for New York State Workers

Glad I live upstate, far away from that cocksucker.

Tue, 11/10/2015 - 21:59 | 6775403 duck dodgers
duck dodgers's picture

Long calls and puts arent gambling?

Tue, 11/10/2015 - 22:00 | 6775404 adr
adr's picture

 But they didn't have their multi-billion dollar IPOs yet!!!!!

Make no mistake, that is what the employees of FanDuel and DraftKings were betting on.

Guess their valuations just dropped to zero.

Guess the long enough timeline is getting shorter.

Tue, 11/10/2015 - 22:12 | 6775464 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Schneiderman is protecting market share for illuminati Mafia Casino owners, and shareholders, plain, and simple. Jews in Jurisprudence running shotgun for Italian Mafia as per usual. The Oligopoly cannot allow interlopers because people are fast running out of disposable income that they can afford to gamble with. In essence, the Casino gambling business is like the Baltic Dry Index, and CAT.

 

Going bankrupt quick!

Wed, 11/11/2015 - 07:32 | 6776421 AllBentOutOfShape
AllBentOutOfShape's picture

I don't necessarily have anything against people playing daily Fantasy, but as long as online poker is classified as a "non-skill" game making it illegal, then daily Fantasy should be illegal as well.

Wed, 11/11/2015 - 12:38 | 6777547 esum
esum's picture

NY AG IS A REAL LIBTARD PIECE OF SHIT WHO THINKS HE CAN BE GOV OF NY SOME DAY...... 

people will continue betting cause this one is going into the courts and hwo does he stop it... 

too much $$$ and big players involved 

and the AG will LOSE..... 

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