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A daily fantasy sports company not named DraftKings or FanDuel has called out the New York State Attorney General. Andrew Busa, Founder and CEO of FantasyHub, says that New York Attorney General Eric Schneiderman has improperly targeted the daily fantasy industry while turning a blind eye to gambling and casino companies that line his pockets.
In an email titled, "An aggressive response against New York's actions on DFS," Busa writes, "Last year alone Eric Schneiderman took in $48,750 in campaign contributions from gambling and casinos companies; this doesn’t include $37,250 from Cantor Fitzgerald, one of the largest private partnerships on Wall Street, and in the past decade moved in to many industries including gambling. Cantor Gaming controls over 30% of the Nevada sports wagering market. Where is their cease and desist?"
Busa relied on a Wall Street Journal article from January 8, 2014 for the position that Cantor Gaming controls more than 30% of Nevada's sports-wagering market.
New York follows Nevada as the most recent state to take the position that daily fantasy sports operations constitute illegal gambling . Whereas Nevada has a mechanism for sites like FanDuel and DraftKings to apply for gaming licenses and be deemed legal if registered, no such option exists for daily fantasy sports websites in the State of New York, where sports betting remains illegal under the Professional and Amateur Sports Protection Act of 1992.
Currently, no daily fantasy sports operators have applied for a gambling license in the State of Nevada, which is believed to be due to a fear that it will be used against them as a tacit admission to engaging in gambling operations.
While it has not been expressly stated as such by the Nevada Gaming Control Board, it is likely true that casino licensees were influential in the adoption of a licensing mechanism for daily fantasy sports operations, thereby deeming them to be providing gambling opportunities to players. Busa believes that New York Attorney General Schneiderman may also be influenced by those casino-related interests that have provided campaign contributions to him in the past and may wish for daily fantasy sports to remain outside of the state.
"Casino Gambling Expert Steve Bourie reported in 2014 that while Eric Schneiderman has been AG since 2011, 'All New York racinos, are using bait and switch tactics on their video poker customers by not clearly explaining that the games they offer are not based on skill. Unlike slot machines, where no skill is involved, video poker games in almost all U.S. gaming jurisdictions are based on skill.' Where was their cease and desist?," asks Busa.
Additionally, Busa states, "To a third party, it is interesting an Attorney General, in a state where he doesn’t oversee the Gaming Commission, would happen to take in campaign donations from casinos. Those contributions which only occurred in 2014 and not in 2011, what changed?"
Busa did not have to make his position on the New York Attorney General public, as DraftKings and FanDuel are the only daily fantasy sports companies that have thus far received cease and desist demands. However, his position is that the Attorney General's office did not just call out DraftKings and FanDuel, but the entire industry. Busa also notes that FantasyHub will continue to operate in New York, but does not provide pay-for-prize services to residents of Arizona, Iowa, Montana, Nevada, Louisiana and Washington.
"In my opinion, when an event occurs out of the blue, without a ton of evidence, there is typically something else in play," added Busa. "The AG, likely, didn’t consult the New York Gaming Commission when he made his decision. There is one data point; about 1% of DraftKings winners win a vast majority of the money. That report comes from Sports Business Journal. Did he talk to any other companies?"
"AG Eric didn’t ask FantasyHub what percent of users win a large portion of the money. If he did, I would have told him 10x more users win on FantasyHub than on DraftKings, when comparing to the SBJ report," says Busa. "I can only ask, why not? Why Daily Fantasy to use your powers to make change? Who are the victims? where is the harm for what we do?"
Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.
