It was a pretty glum New Year celebration for daily fantasy sites FanDuel and DraftKings, following an amended lawsuit filed against them yesterday by New York attorney general Eric Schneiderman. The two biggest fantasy sports sites have been facing legal trouble for some time now, but this latest suit has the potential to be the most damaging. It asks for FanDuel and DraftKings to return all of their profits made in New York, repay customers who lost money and pay up to $5,000 in fines to every customer. As ESPN reports, the two companies have earned more than $200 million in entry fees last year from around 600,000 customers.
At the heart of Schneiderman's argument is the idea that FanDuel and DraftKings are offering services that are basically illegal gambling. Both companies argue that daily fantasy is more of a game of skill. The New York attorney general also claims both have been employing deceptive advertising practices. A $600 deposit bonus advertised by DraftKings was actually only worth $24, Schneiderman said, with the full value unlocking when you spend at least $15,000.
This latest suit is just the latest bit of drama facing FanDuel and DraftKings in New York. Back in December Schneiderman was able to get both sites shut down for a few hours, until a judge overturned that decision. We don't know when they're actually going to trial in New York, but the companies will be speaking before an appellate panel on January 4 to see if they can keep operating for now.
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