Back in early August, Daily Fantasy Sports companies like DraftKings and FanDuel were reinstated and legalized in the state of New York by Governor Andrew Cuomo. Over two months later, the settlement between the two parties is on the horizon.
In March, the New York Attorney General’s office claimed daily fantasy sports websites such as DraftKings and FanDuel created false advertising that took over the country and brought people onto their platforms. Six months later, a settlement agreement between the companies and the NY Attorney General’s office is getting closer, according to the New York Times.
Two NY Times sources said the negotiations were continuing, but a settlement is closer than ever before. The settlement is expected to be between $8 and $12 million.
The large price tag isn’t the only big agreement in the settlement. It also requires the websites to acknowledge what Attorney General Eric T. Schneiderman’s investigation found to be true. The investigation looked into fraudulent practices such as false advertising and would possibly force companies to institute more intense consumer protections than what was required by Governor Cuomo when he legalized the gaming services in August.
“While we cannot comment on the details, we can confirm that we have been in ongoing settlement negotiations with the New York attorney general’s office. They have been tough but fair, and we hope to reach an acceptable resolution.” FanDuel spokeswoman Justine Sacco said.
No spokesman for DraftKings responded to the NY Times’ request for a comment before their original story was posted Sunday.
Right now, the two major websites in DraftKings and FanDuel are running out of money. As a result, the two have negotiated with the Attorney General to pay the settlement in installments.
FanDuel and DraftKings are behind on payments to their vendors, and FanDuel has had to lay off more than 60 employees while both. One major vending service the two websites are behind on payments towards are lobbying firms that have worked towards legalizing daily fantasy across the United States.
This entire mess started at the start of the 2015 NFL Regular Season when DraftKings and FanDuel spent hundreds of millions of dollars on advertising with the league. Back then, no states had made a big issue of whether or not the gaming was legal, and as a result, the websites grew possibly too fast and are now in the hole.
When the two top websites exploded on the seen, they brought in major investors as well, like Dallas Cowboys owner Jerry Jones, and New England Patriots owner Robert K. Kraft. However, due to a lot of the issues they’ve had in recent months, the websites have gone the wrong direction in terms of revenue.
What really got the ball rolling with this whole mess was in October of 2015, when a DraftKings employee won a major jackpot on FanDuel, and Mr. Schneiderman launched an inquiry into whether the companies were sharing insider information.
The insider information issue led to multiple lawsuits and the eventual complete shutdown of Daily Fantasy Sports in New York.
With Daily Fantasy Sports now back in New York as of August, it’s only fitting that just a couple months later, the websites are back in the news. Only this time, they’re losing money to the government and taxpayers instead of their users.
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