DraftKings has hired two high-profile attorneys and will cut back on advertising amid a looming battle over formal regulation of the daily fantasy sports industry. The decisions unfolded as both DraftKings and FanDuel announced legal action Friday to block New York Attorney General Eric Schneiderman's formal ban on daily fantasy contests within the state.
DraftKings retained David Boies and Jonathan Schiller of the law firm Boies, Schiller & Flexner, the company said in a press release. Boies represented former U.S. Vice President Al Gore during his 2000 legal battle over the presidential vote recount in Florida and helped to overturn California’s proposed ban on gay marriage, the New York Daily News reported. He also represented the National Basketball Players Association during the 2011 NBA lockout.
“Mr. Boies, Mr. Schiller and their team look forward to representing DraftKings and joining their top-flight legal team, which will work with the regulatory agencies, including the New York attorney general, to resolve this dispute,” a DraftKings spokesman said. “A swift resolution would protect the rights of consumers and allow DraftKings players to continue to play the fantasy sports games so many people love.”
DraftKings and FanDuel are the country’s biggest daily fantasy sports operators, with each company valued at more than $1 billion and backed by hundreds of millions of dollars in private investments. The operators argue their contests are games of skill, not chance, and are thus exempt from federal bans on other forms of online gambling. But federal and state officials have initiated multiple inquiries into the industry’s legality since last month when a DraftKings employee’s accidental leak of customer data raised questions about internal business practices.
Schneiderman issued the strongest-yet rebuke of the daily fantasy sports industry Tuesday, formally referring to the contests as illegal gambling rings.
“Daily fantasy sports is neither victimless nor harmless,” Schneiderman said. “And it is clear that DraftKings and FanDuel are leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country.”
Both FanDuel and DraftKings have filed suit to block Schneiderman’s ban on daily fantasy games. DraftKings’ filing in New York state Supreme Court asked for Schneiderman’s action to be deemed unconstitutional and for daily fantasy contests to be classified as games of skill, the Boston Globe reported.
“Today, we have taken decisive legal action to prevent a unilateral, misinformed and legally misguided attempt by the New York attorney general to act as “judge, jury and executioner” for daily fantasy sports in New York," DraftKings said in a statement. "We are asking the New York Supreme Court to rule that the attorney general’s cease-and-desist letter is unconstitutional, an abuse of discretion, and simply wrong. We are confident in our legal position and intend to continue to fight to preserve the right of the over 500,000 New York consumers to play the fantasy sports games they love.”
At the same time, DraftKings is cutting back on its ubiquitous advertising campaign. The company, which has official partnerships with eight NBA teams, is asking some of its partners in the league to defer 10 percent of their payments and feature its banner less frequently on television, Bloomberg reported.