New York calls FanDuel and DraftKings gambling, orders shutdown

The New York Attorney General's office has ordered that fantasy sports services Fan Duel and DraftKings cease taking money from residents of its state -- branding the services as online gambling, the New York Times reports.

This comes in the wake of a Nevada ruling that fantasy sports betting is gambling -- and requiring companies to obtain licenses to operate in the state. Fantasy eSports service Vulcun ceased operations in Nevada as a result of that ruling. FanDuel recently acquired AlphaDraft as an entry into the eSports market. DraftKings also offers eSports services.

The fantasy sports industry has lately been under intense scrutiny, following a major scandal, as a DraftKings employee won money from FanDuel -- potentially based on insider information gleaned from his work. The New York State Attorney General's office had begun an inquiry into fantasy sports services last month in response.

New York is one of the most populous and influential states in the U.S., and this move may have significant ripples for the industry. According to a DraftKings spokesperson quoted in the New York Times story, the company has 500,000 users in New York State.

In a statement, New York State attorney general Eric T. Schneiderman said, “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.”