It really comes as no surprise that New York’s Attorney General has ordered FanDuel and DraftKings to stop taking money from New York residents. This is because the New York AG has determined that the operations are illegal gambling enterprises, even though the companies insist that they rely on skill rather than chance. Those of us who remember the explosion and subsequent clamp-down on online poker saw this coming, and I’m betting (sorry) that it won’t stop with New York.
Internet-based gaming first caught Congress’s attention in the mid-00s with the proliferation of websites devoted to playing poker online. The Unlawful Internet Gambling Enforcement Act (the acronym for which, UIGEA, is strangely unwitty) is codified at 31 U.S.C. §§ 5361-5367, and was passed in 2006 after the National Gambling Impact Study Commission recommended the passage of legislation to prohibit the electronic transfer of funds to gambling sites or the banks which supported them. In 2011, indictments were brought against PokerStars, Full Tilt Poker, and Absolute Poker, alleging the federal crimes of conspiracy, wire fraud, money laundering and illegal gambling. At least one individual associated with the case pleaded guilty and was sentenced to time served.
Fantasy sports have always stayed just inside the legal side of the line, and we’ll see if the ongoing FBI and DOJ investigations change that.
In Texas-related developments, Governor Abbott has ordered the Texas Lottery Commission to cease activities related to gathering information about incorporating internet gaming to the State’s sanctioned gambling framework.