On Tuesday, New York Attorney General Eric Schneiderman sought an injunction to prohibit Fanduel and DraftKings from operating in the state, saying they were “plainly illegal” and “nothing more than a rebranding of sports betting,” the New York Times' Joe Drape reported.
Among the most striking stats included in the injunction: DraftKings data showed that 89.3% of players "had an overall negative return on investment across 2013 and 2014."
"A vast majority of players are net losers, losing far more money playing on the sites than they win," the attorney general alleged.
In an email, Chris Grove, the editor of OnlinePokerReport.com, an online gambling news site, said the stats were not surprising.
"It's hard to beat the rake," he said, referring to the "house" or game owner.
In his view, poker, sports betting, and daily fantasy sports—also known as DFS—are fundamentally similar activities.
"So if we have decided that the first two are gambling for the purposes of the law, it seems to me that DFS should be treated similarly," he said.
The complaint puts forth some other charges against the companies, as follows:
- The CEO of DraftKings has spoken "openly about DraftKings as a gambling company," having called daily fantasy sports a “mash[-]up between poker and fantasy sports,” suggesting DraftKings operates in the “gambling space,” and describing its revenue model as “identical to a casino.”
- DraftKings has embedded gambling keywords into the programming code for its website, including "weekly fantasy football betting,” “weekly fantasy college football betting,” and “Fantasy College Football Betting.”
- FanDuel's entire scheme was designed by Nigel Eccles, described as "a veteran of the legal online betting industry in the United Kingdom." The company also admitted to an early investor that its target market is male sports fans who “cannot gamble online legally.”
The companies have argued they are games of skill. In a statement, a Fanduel rep said their game "calls upon users to research and evaluate players, opponents, matchups and other variables just like you would in a season-long fantasy season," which are usually free to play.
The rep added that "71% of people who ever play on FanDuel (any sport) win."
DraftKings said in a statement that, "the Attorney General’s view of this issue is based on an incomplete understanding of the facts about how our business operates and a fundamental misinterpretation and misapplication of the law."
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.