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Fantasy Sports are Skill-Based, Claims Draftkings

MANHATTAN (CN) - In legal filings citing horse racing and mah jong games, DraftKings, under attack for allegedly offering online illegal sports gambling, said fantasy sports are skill-based games-and ones that are already legal.

In a brief filed yesterday in New York's Appellate Division, the online fantasy betting site stated that prosecutors have not met their burden in proving DraftKings allows participants to gamble on fantasy sports or that the games harm anyone.

"DraftKings serves as nothing more than an administrator that collects entry fees, sets contest rules, calculates points, and awards prizes to the winners of [fantasy sports] contests," the Feb. 22 brief states, saying a trial court erred in granting an injunction against the company's fantasy sports.

Common factors in fantasy sports such as athlete selection, team salary caps, and limits on how often a player can tinker with his or her fantasy team suggest the games are more skill-based than luck-based, according to the filing, which was filed by DraftKings' attorney David Boies of Boies, Schiller, & Flexner.

Last fall, New York Attorney General Eric Schneiderman targeted DraftKings and FanDuel for allegedly offering gambling on fantasy sports and issued cease-and-deist letters against the two sites. FanDuel and DraftKings each filed lawsuits against Schneiderman after he shut down their business.

In December, New York Judge Manuel Mendez barred DraftKings and Fanduel from taking wagers, saying even though the two sites avoided words like "wagering" or "betting" they still clearly engaged in gambling.

Mendez said New York penal code defines gambling as a "contest of chance" in which a person "stakes or risks something of value." He referenced the two sites' entry fees, which can be as much as $10,000, as "something of value."

That injunction a wrongly granted, however, as Schneiderman failed to prove fantasy sports are gambling, the company said in a Feb. 22 brief. The brief states the fantasy sports games are games of skill with entry fees and award prizes, not gambling enterprises.

"Rather than identify the concrete and immediate harms necessary to obtain a preliminary injunction, the NYAG instead resorted to conclusory attacks and speculation," the brief states. "If the NYAG had actual evidence that they caused imminent public harm, he would have identified it to the trial court.

"Daily fantasy sports contests have been offered openly and transparently in New York for nearly a decade," the filing continues. "The NYAG's decision not to seek an injunction against such contests until recently belies any urgency in the drastic remedy it no seeks."

In October, citing New York anti-gambling laws from the 1980s, Schneiderman likened fantasy sports betting to poker.

"A small number of professional gamblers profit at the expense of casual players," he wrote in November, noting that "the top one percent of DraftKings' winners receive the vast majority of the winnings."

The Feb. 22 filing states that seemingly unfair statistic proves fantasy sports is not gambling, since those with greater skill are able to do better. The filing also draws parallels between fantasy sports games and horse racing. "Just as the horse owner competes based on the performance of his horse and jockey, so does the [DraftKings] player compete based on the performance of his selected fantasy team," the 67-page filing states.

Further, after the start of a horse race-or a football or baseball game-the horse owner or fantasy sports player has no further control over the outcome, the filing states.

A spokesman for the Attorney General's Office reiterated that the two sites should be prohibited from taking bets in New York State.

"Daily fantasy sports are skill-based games that are, and should be, legal," attorney David Boies said in a statement. "[DraftKings'] contests are no less legal than season-long fantasy sports, which the Attorney General has repeatedly conceded are legal."

If the injunction were allowed to remain in place, it would "force DraftKings to shutter its business in New York, depriving its 375,000 New York customers of the contests they have enjoyed for years, and causing DraftKings to lose millions of dollars in unrecoverable revenue," the filing states.

FanDuel was founded in 2009 and DraftKings in 2012. Both have operated publicly since their inception and boast millions of customers nationwide.

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