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| The DraftKing and FanDuel websites attract sports fans and gamblers from around the country—except for those in New York State. |
DraftKings and FanDuel, the two
largest players in the daily fantasy sports game, have agreed to halt
operations in New York until the state decides on a bill which would make
such games legal in the state.
The companies operate by
allowing players to pay for games in a system that has been labeled gambling by
a number of states. New York is one of the biggest draws for such companies, which
operate in a multibillion-dollar industry. New York was DraftKings’ second
largest market in 2014.
The bill in question would
allow such games to be played in the state of New York, but would require a one
time $500,000 fee to be paid by companies like FanDuel in order to operate
there. That fee could be a problem though, as it effectively keeps smaller
companies from gaining any traction in the state.
FanDuels and DraftKings
dominate the industry, with Yahoo! coming in at a distant third, and a number
of other, much smaller companies sitting below that. Companies would have to
generate quite a lot of income in other states before they could afford to tap
into the New York market, which might not be worth it for some of them.
Concerns for a potential
monopoly probably don’t bother the giants of fantasy sports who agreed to halt
operations in New York as part of a settlement with the state’s attorney
general.
In exchange, they put to rest a
long-standing legal battle and they won’t have to pay fines or suffer other
penalties if the bill doesn’t pass, and they are found to have operated
illegally in the state.
While they’re certainly hoping
that the bill passes so they don’t lose a valuable market, not having to pay
the penalty for breaking the law, is a pretty sweet deal.
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