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$8 Million Settlement Soon to be Reached in Fantasy Sports Suit

Elizabeth DiNardo, Esq. | Associate Counsel
Update as of 4:05pm EST Time October 25, 2016: DraftKings and FanDuel settlement of $12 million with NY AG Schneiderman for false advertising is official; each company to pay $6 million.


An $8 to $12 million settlement may soon be reached between New York Attorney General Eric T. Schneiderman and popular online fantasy sports sites, FanDuel Inc. and DraftKings Inc. The companies, which were valued at over $1 billion each in 2015, came under investigation from Schneiderman for false advertising, consumer fraud and insider trading in October 2015 after an employee of DraftKings won $350,000 on FanDuel based on National Football League information not released to the public. At the time the investigation began, the sports betting websites were bombarding nationwide airwaves with commercials boasting to sports fans that they could get rich quick using the sites. However, it was soon discovered that nearly 90% of DraftKings users lost money using the site.

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In November 2015, Schneiderman ordered both companies to cease operations in New York State, announcing that the fantasy sports betting fell under the umbrella of illegal gambling. Schneiderman later advised the state legislature to define the legal status of the sites and in August 2016, New York Governor Andrew Cuomo signed legislation that made the fantasy sports sites legal in New York. However, despite this recent legalization, the time that the companies spent shut down in New York and in other states across the country, including Illinois and Texas, severely hurt business. The companies are in such a state of financial disrepair that, according to The New York Times, they have requested to pay the potential settlement in installments. In addition to paying the state, the settlement may also require that the companies acknowledge the findings of Schneiderman’s investigation and put stronger consumer protections in place. 

The case is: The People of the State of New York, By Eric T. Schneiderman v. FanDuel, Inc., Case no. 45305/15


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