FanDuel, DraftKings to Pay New York $12M, Agree to New Rules

NEW YORK, NY — Daily fantasy sports sites FanDuel and DraftKings have come to an agreement with the state of New York to pay $12 million — $6 million by each — to settle a lawsuit over false advertising claims. And the agreement will also bring with it some new rules for how fantasy sports are marketed in New York.

Attorney General Eric Schneiderman announced the agreement on Tuesday afternoon to resolve an outstanding lawsuit against FanDuel and DraftKings over lawsuits alleging "false and deceptive advertising practices by the companies."

The two companies were barred from operating in the state due to gambling laws from November 2015 until early August when Gov. Andrew Cuomo signed a bill to legalize the online games. The lawsuit against false advertising, however, remained unsettled until Tuesday. The false advertising suit was the last remaining legal hurdle for the companies to clear.

"DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers," Schneiderman said in a statement. "These agreements will help ensure that both companies operate, honestly and lawfully in the future."

New York fantasy players, who've already returned to the sites, won't notice much in the way of changes, but FanDuel and DraftKings — the two dominant sites in the industry — were forced to admit to a few things in advertising going forward, including:

• Clear disclosure of terms and conditions for marketing promotions
• Expected winnings
• Expected performance in the online contests

Maybe most noticeably, each site will now be required to document the rate of success for contests, including how much the top 1 percent, 5 percent and 10 percent of players earn. The state pushed for that requirement after noting how much of the prize money was won by high-volume professional players using statistical analysis as opposed to casual gamers, the majority of whom lost money over time according to the AG's investigation.

The Fantasy Sports Trade Association estimated $26 billion were spent on fantasy sports in 2015, over $400 per player.

Photo Credit: vale270502 via Wikimedia Commons