A judge ruled today that daily fantasy sports companies FanDuel and Draftkings must cease operations in the state of New York. The ruling, handed down by New York Supreme Court Justice Manuel Mendez, determined the fantasy betting sites, though largely skill-based, require a considerable amount of luck and have no place in the state that literally accommodates substantially high-risk investments in volatile stocks on a daily basis.
“New York State penal law does not refer to ‘wagering’ or ‘betting,’ rather it states that a person, ‘risks something of value.’ The payment of an entry fee as high as $10,600 on one or more contests daily could certainly be deemed risking something of value,” Mendez wrote, nowhere near the world’s two largest stock exchanges where 55% of investors will lose more than half of their initial capital.
Avid players argue that fantasy sports call for a great deal of strategy, carefully cultivating vital statistics in the form of spreadsheets indexing every steal, 3-pointer, or passing yard. “Here, look. Colts QB Matt Hasselbeck. Questionable pick this week. Suffered neck and rib injuries against Pittsburgh,” a typical DraftKings might say, clearly offending the sensibilities of a Wall Street investor analyzing S&P 500 index companies posting an earnings decline of 4.4% in the fourth quarter of 2015.
Critics argue these daily fantasy sites facilitate illegal gambling as they come with a hefty amount of risk, apparently unlike the stock market, where disastrous fluctuations never happen and there’s zero risk.
Accounting for over $200 million in combined entry fees in 2015, over 600,000 daily users of FanDuel and DraftKings live in New York, a state that most certainly didn’t become the leading financial center of the world through high-stakes speculation.