MANHATTAN (CN) — Months after FanDuel and DraftKings shuttered under fire for violating state anti-gambling laws, New York Gov. Andrew Cuomo signed legislation on Wednesday legalizing daily fantasy sports in New York.
FanDuel and DraftKings had ceased their New York operations since March, under a settlement pausing their longstanding litigation with the state’s Attorney General Eric Schneiderman.
In November, Schneiderman sent the companies scathing cease-and-desist letters labeling their business model as “multibillion-dollar scheme intended to evade the law and fleece sports fans across the country.”
New York had been only one of several states — including Texas, Tennessee, and Illinois — to clampdown on fantasy sports companies after reports emerged that insiders rig the game through sophisticated algorithms running confidential information.
Insisting that fantasy sports are games of skill, FanDuel and DraftKings stumbled in court when Manhattan Judge Manuel Mendez found that they amounted to illegal gambling.
The case had been heading toward an appeal when the companies bid their “hundreds of thousands” of New York fans a temporary farewell and promised to work with state legislators to change the law that closed them.
After bills introduced by Republican Sen. John Bonacic and Democratic Assemblyman Gary Pretlow glided through the state Legislature, Gov. Cuomo gave the law his signature on Wednesday, estimating that taxes on the bets would generate $4 million for education.
“Daily fantasy sports have proven to be popular in New York, but until now have operated with no supervision and no protections for players,” Cuomo said. “This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections, and more funding for education.”
Schneiderman vowed in a statement to continue regulating the fantasy sports under the new statute.
“As I’ve said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law and protect New Yorkers from illegal or unscrupulous conduct,” he said.
Meanwhile, Schneiderman said, “Our false advertising and consumer fraud claims for past misconduct by Draft Kings and Fan Duel will continue to move forward.”
FanDuel’s CEO Nigel Eccles noted in a statement that New York’s action on Wednesday follows a nationwide pattern this year.
“Since only January, eight states — Colorado, Indiana, Massachusetts, Mississippi, Missouri, Tennessee, Virginia, and now the Empire State — have passed laws clarifying the legality of fantasy sports and creating strong consumer protection regulations,” he said. “This progress in such a short window of time, during a challenging time for tech companies, is a powerful statement about the extraordinary support for our industry. And we recognize that this success in our home state of New York and our snowballing success across the country is due to the advocacy, efforts, and unbending belief of our players, and we owe them incredible gratitude for their support of fantasy sports.”
DraftKings CEO Jason Robins also welcomed Empire State fans back onto its website.
“We would like to thank our hundreds of thousands of New York supporters for their passion and loyalty over the past several months,” he said. “Your hard work and efforts have made an incredible difference.”
Neither company responded Wednesday afternoon to press inquiries about pending litigation over the remaining charges.