My job is to enforce the law, without fear or favor. For more than a century, New York laws have banned gambling. The few narrow exceptions that exist — which do not include sports betting — all come with strong regulation and oversight to ensure fairness and protect New Yorkers from fraud.
So when a massive, illegal gambling operation exploded in New York — along with allegations of potentially fraudulent practices — it was not even a question that my responsibility was to take action. That is why I have asked a court to stop the top two daily fantasy sports companies, DraftKings and FanDuel, from continuing to operate in New York.
Daily fantasy sports is much closer to online poker than it is to traditional fantasy sports. Unlike most traditional, season-long fantasy sports sites, which make most of their money from administrative fees and advertising, FanDuel and DraftKings take a cut of every bet. That is what bookies do, and it is illegal in New York.
In fact, as our court papers lay out, these companies are based on business models that are identical to other forms of gambling. FanDuel was created by a veteran of the legal online betting industry in the United Kingdom, while the CEO of DraftKings suggested that it operates in the “gambling space,” and described its revenue model as “identical to a casino.”
FanDuel and DraftKings have made the argument, over and over — including yesterday in this paper — that they run “games of skill” and are therefore legal. This is nonsense. New York law prohibits sports wagering — betting money on a future event outside of the gambler’s control — regardless of the skill involved. Yet this provision of the law is deliberately ignored by both FanDuel and DraftKings.
Consider the final moments of a football game where the outcome has been decided and the winning quarterback takes a knee to run out the clock and assure victory. Let’s say it’s Eli Manning, and the Giants are defeating the Eagles or the Cowboys. Statistically, this play would cost the quarterback one yard — a yard that could make the difference between someone on DraftKings or FanDuel winning or losing tens of thousands of dollars.
What did that have to do with the bettor’s skill? It’s the classic risk involved in sports betting.
Games of chance often involve some amount of skill; this does not make them legal. Good poker players often beat novices. But poker is still gambling, and running a poker room — or online casino — is illegal in New York.
Like online poker, daily fantasy sports rely on a steady stream of “minnows” to feed the “sharks.” That’s why more than 89 percent of one site’s players are losers, despite seemingly endless TV ads promising easy money. This doesn’t bear on the question of whether daily fantasy sports is legal — but it is a reminder that laws against gambling are more than just the whims of the state.
In fact, we have heard from experts that daily fantasy sports players are increasingly showing up in Gamblers Anonymous meetings and the offices of addiction counselors. In 2013, the National Council on Problem Gambling estimates the annual costs of gambling addiction in the United States at about $7 billion, including from crime, incarceration and bankruptcy.
Daily fantasy sports may be a particularly pernicious form of illegal gambling precisely because it is so easy to access. Players can lose lots of money with a few touches on their smartphone — any time, any place, drunk or sober. Finally, it is extraordinarily difficult to verify the age of a gambler when they are nothing more than an online identity.
Daily fantasy sports companies are welcome to try and persuade the Legislature, the governor and the public that their businesses should be legalized and regulated like every other form of legal gambling in New York. Until then, I believe they are as illegal as a casino in Times Square — and, in the absence of any consumer protections or oversight, potentially more harmful. I was elected to enforce the law, and that’s exactly what I intend to do.