DraftKings, FanDuel file temporary restraining order to expediting decision

Daily fantasy sports companies DraftKings and FanDuel asked a New York Supreme Court judge on Monday for a temporary restraining order and to expedite his decision on whether the company can continue doing business from customers in the state as it battles Attorney General Eric Schneiderman.

A hearing on the matter is expected to be held on Monday afternoon in court.

The moves followed up Friday's petition to the court asking Justice Manuel Mendez to grant the company a restraining order that would prevent Schneiderman from pressuring and threatening the company's partners from doing business with them. In Friday's action, the company said that, after Schneiderman's office applied pressure on payment processor Vantiv, the company stopped accepting deposits from its players within New York's borders.

Monday's filing also contained more arguments as to why Schneiderman is wrong in his contention that daily fantasy is illegal in New York State and why he shouldn't have the power to immediately shut down its business.

The office of the attorney general did not immediately comment on the motion filed by DraftKings on Monday but did react to the proposal of the new daily fantasy bill.

"DraftKings and FanDuel have hired a fleet of lobbyists to convince the Legislature to legalize their gambling operations," said Matt Mittenthal, a spokesman for Schneiderman. "How does that square with these companies' insistence that their sites are presently legal?"

Schneiderman contends that the daily fantasy sites, in particular DraftKings and its competitor, FanDuel, violate the statute of New York Penal Code (225.0), which states that "a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or future contingent event not under his control or influence."

In its case to prove that its daily fantasy is not illegal because it involves a dominating element of a game of skill, DraftKings said a study by Gaming Laboratories International revealed that lineups selected by skilled fans beat random generated lineups more than 80 percent of the time in all four major sports. In NBA games, the skilled lineup beat the random one 96.1 percent of the time.

On Monday, New York State Sen. Michael Razenhofer introduced a bill that seeks to clarify that daily fantasy games should be considered games of skill, and therefore not gambling, within the state. If passed by both houses of the legislature and signed by the governor, it would take effect on Nov. 1, 2016.

Furthermore, DraftKings lawyers argue that a daily fantasy entry fee doesn't constitute a bet, leaning on a case law from New Jersey -- Humphrey v. Viacom -- that established that distinction. As for DraftKings itself, it can't be considered a bookmaker, the filing argues, because the company is a third party that doesn't make more or less with any action. DraftKings takes a percentage of the action and only makes more based on more entry fees.

DraftKings also argues that Schneiderman unilaterally deciding that daily fantasy is illegal and seeking to shut down the businesses of DraftKings and FanDuel is unconstitutional. Schneiderman, it says, doesn't have the legislative and judicial power to do that.

DraftKings says that New Yorkers make up at least 7 percent of its customers and have paid for $99 million in entry fees in 2015, which has resulted in $10 million in revenue.