Fantasy sports websites reach $12M settlement with NY state

Fantasy sports websites reach $12M settlement with NY state
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Daily fantasy sports websites DraftKings and FanDuel are agreeing to pay $6 million each to settle allegations from New York's attorney general over false advertising.

“Today’s settlements make it clear that no company has a right to deceive New Yorkers for its own profit,” New York Attorney General Eric Schneiderman said in a statement Tuesday, announcing the settlement.

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“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.”

The agreement comes after a year-long investigation found that the companies "consistently misled consumers in advertisements."

The companies will reform their advertising as part of the agreement. The AG's office said their marketing will now include “clear disclosure of terms and conditions for marketing promotions, expected winnings, and expected performance in the online contests,” as well as resources for players who may have gambling addictions.

The websites are an alternative to season-long fantasy sports, allowing the public to build online teams of players based on day-to-day stats. Supporters said the games were based on "skill" but critics said they were chance-based games, which are illegal in New York state.

Schneiderman banned FanDuel and Draftkings in New York in March. The sites relaunched in August after New York Gov. Andrew Cuomo (D) signed legislation categorizing them as “games of skill.”

Schneiderman said at the time that he would still pursue his claims that the websites used false advertising to get participants.

His office on Tuesday highlighted several violations it said it found in its investigation of FanDuel and DraftKings.

The office said the sites misled new users about the advantages professional daily fantasy sports players had over casual players. The websites also gave users incorrect statistics about their likelihood of winning; failed to honor promises to match users initial playing deposits; and didn't disclose the risks of gambling addition or provide adequate resources for those struggling with addiction, according to his office.

Both websites expressed a desire to move on from the regulatory and legal battles.

“We are pleased to move forward and as our business continues to grow,” said a DraftKings spokesperson.

“As previously stated, the negotiations were tough but fair, but we are very pleased to have reached a resolution as this allows us to focus on our busiest time of year with NFL, NHL and soccer in full swing, and NBA season starting tonight,” said FanDuel spokesperson Justine Sacco.