The chief executive of fantasy-sports operator FanDuel Inc. said Wednesday the company will continue to allow New Yorkers to play despite a demand by the state attorney general to shut down in the state.
“New Yorkers can certainly play on FanDuel,” Nigel Eccles, the company’s co-founder and CEO, told reporters. “We’re going to use every avenue we can to stay open.”
Mr. Eccles didn’t say whether the company would continue to allow New Yorkers to play if the company is unable to find a legal recourse in the next five days, the period New York Attorney General Eric Schneiderman gave FanDuel and rival DraftKings Inc. to respond to a cease-and-desist order issued on Tuesday.
DraftKings, in a statement, said it is “evaluating all of our options in order to permit New Yorkers to continue playing the daily fantasy games they love.”
Mr. Eccles also declined to address the matter of whether companies that process player payments, an essential link in fantasy-sports operations, would refuse to do so if the company operated in New York.
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FanDuel is in talks with at least one payment processor over whether to handle funds from players in New York, according to a person familiar with the matter.
Money movement became the key factor in the criminal and civil law-enforcement violations filed against online poker companies in 2010, when the largest names in online poker were forced to stop operating in the U.S.
Online poker companies had found it nearly impossible to transfer money after the federal government began to crack down on online gambling. Most financial institutions wouldn’t accept the payments. That sent the poker companies to work with fringe financial groups and individuals that later were accused in civil and criminal cases by the federal government of using fraudulent means to transfer the funds.
Both fantasy companies argued that the attorney general doesn’t have the authority to unilaterally prevent New Yorkers from playing fantasy sports. The attorney general intends to seek a court order to shut down the sites, a person familiar with the situation said.
The stand by FanDuel and DraftKings came as a smaller fantasy-sports operator announced plans to bar New Yorkers from playing.
Mondogoal, a smaller fantasy operator focused on soccer in the United Kingdom, said in a social media post that it “respects the New York Attorney General’s decision on [daily fantasy sports] and is eliminating cash fantasy sports play in the state of NY.”
Only FanDuel and DraftKings were named in the attorney general’s order, which said the games constitute illegal gambling and are subject to criminal penalties.
“These are not the type of operations New York gambling law is designed to address,” Mr. Eccles said. “FanDuel believes a New York court would disagree” with the attorney general’s mandate.
Roughly 600,000 players, comprising 10% of FanDuel users, are in New York, Mr. Eccles said.
In response to Mr. Eccles’s comments, an attorney general spokesman referred to Tuesday’s cease-and-desist order, which described the companies as, “leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country.”
A handful of other states have previously said fantasy sports amounts to gambling and isn’t allowed. But Tuesday’s cease-and-desist order from New York is the first time fantasy-sports operators have been formally accused of criminal activity.
The industry has been scrambling to contain fallout from an incident last month in which a DraftKings employee admitted on a fantasy-sports message board that he had prematurely released sensitive data about the site’s biggest contest. The same week, he won $350,000 on FanDuel, something both companies acknowledge.
DraftKings said the leak was an accident, and both companies said he didn’t benefit from having early access to data.
Nevada regulators last month ordered daily fantasy-sports sites to shut down and to get a gambling license if they wish to operate in the state. That move was anticipated given opposition to fantasy sports by that state’s formidable casino industry.
