DraftKings and FanDuel have reached a $12 million settlement with New York Attorney General Eric Schneiderman in DFS case.
Daily fantasy sports companies FanDuel and DraftKings have been subjected to a rough year in 2016. Both companies have lost money due to legal battles in several states trying to be able to offer their daily fantasy sports contests. The biggest battle the two faced this year involved the state of New York. New York Attorney General Eric Schneiderman filed a lawsuit against the DFS operators citing false and deceptive advertising practices and now a settlement has been reached.
Reaching a Settlement
The lawsuit was filed against the companies by Schneiderman due to what the Attorney General was calling false advertising practices. The AG stated in the filing that DraftKings and FanDuel both had advertisements that claim players could earn an easy win by taking part in DFS contests. However, the AG says that actually as much as 90% of players lost money by taking part.
The two DFS operators and the Attorney General have been going back and forth trying to reach a settlement. It has now been announced that each company will now pay $6 million in settlement costs to resolve the lawsuits. In a press release on the settlement, Schneiderman stated the following:
The office of the Attorney General reported that the agreements impose the highest penalty awards for deceptive advertising in the state as far as recent memory. This is the second time the office of the Attorney General and the DFS operators have been able to agree to a settlement. The first time was when the two brands agreed to no longer offer services in the state while a bill was being enacted over the summer months.
Aside from the monetary aspects of the settlements, the companies also have to conduct reforms to the marketing campaigns released, including providing clear disclosure of terms and conditions for promotions, the expected winnings and performance of online gaming contests. Players who are at risk for compulsive gaming disorders such as addiction should also be provided with resources by the companies. A webpage must also be maintained that will provide info on the success rate of users involved in contests which will include the winning percentage of the players in the top 1%, 5% and 10%.
Both DraftKings and FanDuel have released statements on the settlement reached with the state of New York. DraftKings stated that the settlement concludes the process that began last March and the company is pleased to be moving forward and as the business continues to grow, being focused on making sure that millions of sports fans across the country are able to continue to engage in an innovative way.
FanDuel released a statement as well with Justine Sacco stating that the company has reached a settlement and the negotiations were tough but fair. FanDuel is happy to have reached a resolution that will allow the company to focus on the busiest time of the year with the NFL, NHL and soccer seasons underway as well as the NBA kicking off. FanDuel looks forward to providing sports fans, including users in New York, with the contests they love.