DraftKings and FanDuel Agree To Pay $12m Fine To Settle New York Suit
It has been a whirlwind year for DFS operators DraftKings and FanDuel. It all started going downhill last November when Attorney General Eric Schneiderman of New York filed suits against the companies. This led to a major shakeup for both companies and its effects are still being felt by both operators. Both companies have seen their respective values drastically cut and funding has been difficulty to get as no one wants to touch an industry where the legal status is being questioned.
The good news is that their much talked about lawsuits with AG Eric Schneiderman has come to an end with each operator agreeing to pay $6 million over false advertising claims filed by the AG’s office.
Both companies were accused of “targeting users with a propensity for gambling and addiction” though dubious advertising practices. The $12m settlement is considered a record in terms of a penalty for deceptive advertising but it puts to bed a major obstacle for the DFS industry who has just started to recover from a year in hell.
In a statement Schneiderman said,” Today’s settlements make it clear that no company has a right to deceive New Yorkers for its own profit. DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers. These agreements will help ensure that both companies operate, honestly and lawfully in the future.”
FanDuel Spokeswoman Justice Sacco reacted to the news saying,” The negotiations were tough but fair. But we are very pleased to have reached a resolution as this allows us to focus on our busiest time of year with NFL, NHL and soccer in full swing, and NBA season starting tonight.”
DraftKings also releaseds a statement confirming they were” pleased to move forward as our business continues to grow.” Both companies will be relieved to settle this milestone case as this set in motion a nationwide campaign of legal challenges that seriously threatened the very existence of the DFS market. No doubt that the way forward would be through regulation and on a state by state basis as the question of whether DFS is skill based or a game of chance like gambling still remains unanswered.