FanDuel And DraftKings Settle False Advertising Charges

Online fantasy sports companies FanDuel and DraftKings have agreed to pay $6 million each to settle deceptive advertising allegations, New York Attorney General Eric Schneiderman announced this week.

News of the settlement comes nearly one year after Schneiderman sued both companies for allegedly violating state laws against sports betting and unfair advertising.

The charges related to unfair advertising centered on allegations that the companies duped consumers about their prospect of winning.

The companies' ads "led viewers to believe everyone had the same chance of winning, with minimal investment of time, money or special tools," Schneiderman alleged in documents setting out the charges and settlement terms with DraftKing and FanDuel. "In reality, a small percentage of professional and high-volume players -- making up the majority of winners -- used research, software, and large bankrolls to win a disproportionate share of ... jackpots."

The Attorney General adds that the companies' ads didn't disclose the "advantages enjoyed by high-volume and professional players."

In DraftKings' case, one ad allegedly claimed that a player named Peter Jennings won more than $2 million, but omitted that Jennings was a "high-volume player who had previously worked in sports analytics," according to the settlement agreement.

On top of the fine, the settlement requires both companies to clearly disclose "material" information about the contests. The companies also are required to offer a Web page with information about users' success rates.

DraftKings and FanDuel briefly stopped operating in New York after Schneiderman filed suit. But earlier this year, New York lawmakers passed a bill authorizing daily fantasy sports companies to operate in the state. That measure requires such companies to register with the state, and pay taxes equal to 15% of gross revenue generated in New York.

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