Commentary

NY Attorney General Broadens Online Gambling Probe, Subpoenas Yahoo

New York Attorney General Eric Schneiderman's crusade against daily fantasy sports sites, which has already resulted in lawsuits against DraftKings and FanDuel, could also ensnare Yahoo.

On Tuesday, just hours after Schneiderman sued to shut down Draft Kings and FanDuel, The New York Timesreported that Schneiderman subpoenaed Yahoo for information about its daily fantasy sports site.

It's not clear what precise information Schneiderman is seeking from the Silicon Valley company. But it wouldn't be surprising if he wanted more details about Yahoo's online marketing efforts, given that the complaint against DraftKings included allegations about its search optimization techniques.

Specifically, Schneiderman alleged that DraftKings "embedded keywords related to gambling" in code on its site.

"This led search engines like Google to suggest DraftKings to users looking for gambling," the lawsuit states.

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A Yahoo spokesperson told MediaPost the company doesn't comment on pending legal matters. The spokesperson added that Yahoo is "monitoring industry trends and events closely," and believes it offers "a lawful product" for daily fantasy sports users.

Yahoo rolled out daily fantasy sports games in July. Before that, the company only offered season-long fantasy leagues.

Schneiderman alleges that daily fantasy sports games are illegal in New York, which has long banned betting on games of "chance," including sporting events (except for horseracing).

Supporters of DraftKings and FanDuel argue that fantasy sports should be considered a "game of skill," which is legal in New York, but Schneiderman obviously disagrees.

His lawsuit also sets out a number of reasons why daily fantasy sports isn't comparable to season-long fantasy leagues operated by media companies like CBS Sports and ESPN.

In fantasy leagues that last for a season, players "can exert substantial control over how the fantasy game is administered and scored," his lawsuit alleges. "Among other changes, participants can often adjust the scoring formats, the universe of players available for drafting, the size of each team, the free agency rules, and the lineup requirements."

By contrast, he says, the fast time frame of daily fantasy sports "eliminates any of the strategic elements associated with managing a traditional fantasy team over the course of a season."

Justice Manuel Mendez in Manhattan is expected to hear arguments in person on Nov. 25.

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