NEW YORK, Nov. 10 (UPI) -- New York Attorney General Eric Schneiderman on Tuesday declared payout fantasy football leagues -- like the ones at the center of a recent controversy over reported "insider trading" among employees -- amount to illegal gambling in his state.
Schneiderman's statement could be a billion dollar blow to the fantasy football industry, which is anchored by leagues DraftKings and Fan Duel. The two companies are now barred from accepting money from New York residents.
DraftKings and Fan Duel made headlines last month over reports that at least one employee collected a massive $350,000 payout after using nonpublic information to play on his company rival's site.
Schneiderman said his office has sent out cease-and-desist orders to both leagues.
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"It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country," Schneiderman, New York's top law enforcement official, said. "Today, we have sent a clear message: not in New York, and not on my watch."
"Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling and misleading New York consumers," he added. "Daily fantasy sports is neither victimless nor harmless."
The leagues say their operations are protected by a 2006 federal law exempting fantasy sports from a law barring wagers from being processed on the Internet.
"The game has been played -- legally -- in New York for years and years, but after the attorney general realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal," Fan Duel, headquartered in New York City, replied Tuesday in a statement. "This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, and players across the country."
"We are very disappointed that New York Attorney General Eric Schneiderman took such hasty action today," Boston-based DraftKings said. "New York's actions today are an unfortunate example of a state government stifling innovation, technology and entrepreneurship and acting without full and fair consideration of the interests of consumers."
Although Sneiderman's order makes wagering illegal, he has not yet asked DraftKings or Fan Duel to discontinue their operations in his state.
As a result of Tuesday's announcement, each league urged their customers to act to protect their "right to play."
"Every year 50 million Americans play fantasy sports. I am one of them," a petition by Fan Duel reads. "There are many problems facing our nation, but passionate sports fans that want to connect with our favorite players and teams is not one of them. Fantasy sports is fundamentally a test of knowledge. I play because I love the competition and the camaraderie. It's part of what makes sports our favorite American pastime. I oppose any measure that would ban online fantasy sports. And to anyone looking to end this game I say: Let us play!"
