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From Antitrust Law Daily, December 11, 2015

Injunction against DraftKings, FanDuel stayed by NY appellate court

By Greg Hammond, J.D.

Just hours after a New York state trial court preliminarily enjoined DraftKings, Inc. and FanDuel Inc., two operators of daily fantasy sports websites, from operating in the State of New York, an appellate court stayed the order, allowing the websites to continue their daily fantasy sports contests. Earlier today, the New York Supreme Court in New York County granted Attorney General Eric T. Schneiderman’s motions for preliminary injunction on the state’s false advertising and deceptive acts and practices claims (New York v. FanDuel, Inc., December 11, 2015, Mendez, M.); (New York v. DraftKings, Inc., December 11, 2015, Mendez, M.).

According to published reports, Judge Paul Feinman of the New York Supreme Court, Appellate Division, stayed the injunction, allowing the fantasy sites to do business in New York until January 4.

Schneiderman’s office had opened an investigation into DraftKings and FanDuel in October 2015, concluding that both companies’ operations constitute illegal gambling under New York law. Cease and desist letters were sent to both DraftKings and FanDuel in November, claiming that the companies’ advertisements seriously mislead New York citizens concerning their prospects of winning. The New York Attorney General subsequently filed suit against FanDuel and DraftKings, alleging—in part—violations of New York General Business Laws §§ 349 and 350 for deceptive acts and practices and false advertising.

The trial court granted Schneiderman’s motion for preliminary injunction against both companies, finding that Schneiderman’s office established a likelihood of success warranting injunctive relief under the authority provided in Executive Law §63(12), to avoid fraudulent or illegal acts and violations of General Business Law §§ 349 and 350. In addition, the court found that The New York Attorney General was not required to show irreparable harm under Executive Law §63(12) because it was implied in the need to prevent the effects of fraudulent and illegal conduct on the general public. Lastly, the balancing of the equities favored preliminary injunction due to the Attorney General’s interest in protecting the public interest, especially those with gambling addictions.

The court also denied DraftKings, Inc.’s and FanDuel, Inc.’s motions for preliminary injunction against Schneiderman’s office, which sought to prohibit Schneiderman from taking any enforcement action against the two companies (DraftKings, Inc. v. New York, December 11, 2015, Mendez, M.); (FanDuel, Inc. v. New York, December 11, 2015, Mendez, M.).

The cases are Nos. 453056/2015 and 453054/2015.

Attorneys: Eric T. Schneiderman, Attorney General of the State of New York. Marc Zwillinger (ZwillGen PLLC) and John S. Kiernan (Debevoise & Plimpton LLP) for FanDuel Inc. David Boies (Boies, Schiller & Flexner LLP) and Randy M. Mastro (Gibson, Dunn & Crutcher LLP) for DraftKings, Inc.

Companies: FanDuel Inc.; DraftKings, Inc.

MainStory: TopStory Advertising StateUnfairTradePractices NewYorkNews

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