Buzzer Sounds on Fantasy Sports in New York

MANHATTAN (CN) - Unless New York lawmakers or appellate courts give the businesses their blessing, fantasy-sports sites DraftKings and FanDuel will quit taking bets in the Empire State, documents released Monday show.

The settlement documents set a path toward resolving the war New York Attorney General Eric Schneiderman initiated on Nov. 10 with scathing cease-and-desist letters for DraftKings and FanDuel over their "multibillion-dollar scheme intended to evade the law and fleece sports fans across the country."

DraftKings and FanDuel hoped for judiciary relief, contending that fantasy sports-betting represents a game of skill New York's anti-gambling laws would permit.

Manhattan Supreme Court Judge Manuel Mendez shot this maneuver down late last year, however, noting the fee participants must pay "every time they play, potentially multiple times daily instead of one seasonal entry fee, with a percentage of every entry fee being paid to Fanduel Inc. and DraftKings Inc."

With that ruling under appeal, Schneiderman and the companies charted out a course today on how to bring the competing claims to a resolution.

In nearly identical settlement agreements, FanDuel and DraftKings agreed to fold for the time being, and outlined what they would do if Albany or New York's Appellate Division changes the law in their favor.

Schneiderman celebrated the terms in a statement.

"I'm pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter," he said. "As I've said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it."

Both companies remain on the hook for false-advertising and consumer-fraud claims, stemming from reports that insiders game the system with information and algorithms off limits to mainstream users.

DraftKings and FanDuel, for their part, bid their fans farewell.

"Effective today, as part of a settlement reached with the Attorney General's office, DraftKings will stop offering paid daily fantasy sports contests in New York State," the company said.

Expressing gratitude to the "hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years," DraftKings vowed to "continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love."

A similar goodbye from the Manhattan-based FanDuel lamented the loss of what it called a "critical state," where it employed 170 people.

"We are proud to be one of New York's largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York," the company said.

Monday's settlements adjourn the appellate process until September.

If that court rules in the companies' favor, the parties will "continue discussions regarding the status of the actions, but this agreement shall not bind either party to any course of action," they agreed.

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