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After Ferocious Battle, New York Legalizes DraftKings, FanDuel

Gov. Andrew Cuomo signed into law Wednesday a bill classifying big-money fantasy sports contests as "games of skill" — not illegal games of chance.
In this Wednesday, Sept. 9, 2015, photo, Devlin D'Zmura, a tending news manager at DraftKings, a daily fantasy sports company, works on his laptop at the company's offices in Boston.Stephan Savoia / AP file

101: Daily Fantasy

Oct. 6, 201501:06

The overtime battle between the state of New York and the online fantasy sports companies DraftKings and FanDuel ended Wednesday — and the sports sites won.

Gov. Andrew Cuomo signed into law a bill classifying the big-money contests as "games of skill" — not illegal games of chance.

Under the bill, tax revenue from the games — estimated at $4 million a year — will go to fund education initiatives.

"Daily fantasy sports have proven to be popular in New York, but until now have operated with no supervision and no protections for players," Cuomo said in a statement. "This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections and more funding for education."

The law includes provisions to protect consumers, including the incorporation of parental blocks to keep minors from playing and a requirement that the sites alert players if they're going up against experienced, frequent winners, known in the industry as "sharks."

State Attorney General Eric Schneiderman had blitzed the companies — which have said they took in more than $200 million in entry fees from at least 600,000 customers in New York last year — with investigations, lawsuits and regulatory orders to shut them down as illegal gambling operations.

While the games do involve some skill, they're still primarily games of chance because the outcome is out of the players' hands, he's said, pointing out that injuries, weather and bad referee decisions can blow everything up.

But Schneiderman said Wednesday that he would "enforce and defend the new law" because that's his job.

In a separate attack, Schneiderman has also gone after the companies, which both have aggressive advertising campaigns, for alleged false advertising. In 2013 and 2014, only 11.7 percent of DraftKings users made money, he claimed in a lawsuit filed in December.

Then, in October, The New York Times reported that a DraftKings employee inadvertently released data from the company's Millionaire Maker game, which showed that he had access to information that could provide players with a secret advantage.

Later that week, the same employee won $350,000 playing on FanDuel, the company's rival, according to The Times.

Schneiderman opened yet another investigation, saying at the time, "Fraud is fraud."

In a statement Wednesday, Schneiderman promised that those strategies "will continue to move forward."

(Comcast Corp., which owns NBCUniversal and NBC News, has invested in FanDuel.)