DraftKings, FanDuel Lose Bid To Head Off NY Shutdown

(Reuters) -- Daily fantasy sports companies DraftKings and FanDuel on Monday lost an atttempt to head off the New York attorney general's effort to shut down the companies in the state.

A New York state judge denied temporary restraining orders sought by the companies that would have halted New York Attorney General Eric Schneiderman's efforts to declare the games illegal gambling in the state.

Eric Schneiderman

Schneiderman said the games were against state law last week and told the companies to stop taking money from New Yorkers. The government will move for an injunction against the companies which will be heard in a state trial court on Nov. 25.

In seeking the restraining orders, the companies said that Schneiderman's office had been pressuring their vendors to stop doing business with them, and they could be forced to close up shop in the state.

"DraftKings and FanDuel are operating illegal gambling operations," said Matt Mittenthal, spokesman for Schneiderman. "It should come as no surprise that companies associated with DraftKings or FanDuel are actively reviewing this matter in the context of business decisions."

New York has more daily fantasy sports players than any other U.S. state, according to Eilers Research, so being forced to shut down there could cripple the fast-growing, multibillion-dollar industry.

The order is the latest threat to daily fantasy sports. The two companies have become the subject of congressional inquiries as well as a ban in Nevada after spending hundreds of millions of dollars on television advertising in 2015.

DraftKings has continued to operate as usual in New York despite the pressure from Schneiderman's office. The Boston-based company said it is confident in its legal position.