DraftKings, FanDuel Shut Down in New York

Bloomberg photo

(Reuters) -- Top daily fantasy sports companies FanDuel and DraftKings agreed to halt their business in New York on Monday, betting on a legislative path to make the games legal after a months-long fight with the state's attorney general.

New York Attorney General Eric Schneiderman said the companies agreed to immediately stop operating paid contests in the state. An appeal of an injunction against the companies is slated to be heard by the state's Appellate Division in September.

The settlement means the companies would not have to pay any fines or other penalties related to the gambling charges, even if they are found to have been operating illegally.

"This is a decisive and important victory for the rule of law in New York state," Schneiderman said at a news conference. "No company or individual no matter how powerful or well financed is above the law."

New York is one of the largest markets for daily fantasy sports in the United States. According to court filings, the state was DraftKings' second biggest by revenue in 2014.

Under the settlement, if daily fantasy sports are legalized in New York this year, the gambling claims against the companies would be dropped. The privately held companies could still face charges for false advertising or consumer protection issues.

Bills have been proposed in New York's state legislature to make the games legal, one of which was recently attached to the state budget. That means the matter could be considered as soon as this week.