DraftKings And FanDuel Ordered To Stop Operating In New York

A New York judge has ordered daily fantasy sports sites FanDuel and DraftKings to immediately stop operating in the state.

Manhattan Supreme Court Judge Manuel Mendez said in a 12-page ruling issued on Friday that New York's law against gambling is broad enough to cover daily fantasy sports.

DraftKings said on Friday that it plans to immediately appeal the ruling. “We are disappointed with the court’s decision, and will immediately file an emergency notice of appeal in order to preserve the status quo," attorney David Boies said in a statement.

Mendez's ruling granted New York Attorney General Eric Schneiderman's request for a preliminary injunction against both companies. Schneiderman alleged in a lawsuit filed late last month that FanDuel and DraftKings violate state laws against sports betting and unfair advertising. He alleged that both companies -- which have spent around $100 million on ads this year alone -- dupe consumers with ads that offer "promises of easy riches for a lucky few sports fans."

The companies unsuccessfully argued to Mendez that daily fantasy sports are games of skill, not chance. New York has long prohibited betting on games of "chance," including sporting events (except for horse racing), but allows gambling on games of skill.

Mendez drew on the gambling law's definition of "contest of chance," which says that the outcome turns "in a material degree" on chance, even if skill plays a role.

Late last month, FanDuel stopped allowing New York residents to participate in the site's daily fantasy sports games, but DraftKings has continued to operate in the state.

Update: Late Friday afternoon, an appellate judge stayed Mendez's injunction. 

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