DraftKings, FanDuel approach settlement on false advertising charges

ByDavid Purdum ESPN logo
Monday, October 24, 2016

Daily fantasy sports operators DraftKings and FanDuel are close to settling with the New York attorney general's office over charges of false advertising stemming from last year's massive TV marketing blitz that attracted the attention of law enforcement, sources familiar with negotiations told ESPN on Monday.

The settlement could be finalized as early as today, the sources said. If a settlement is not reached by the end of the week, the attorney general's office will file papers in court and move forward with the charges.

"We are willing to come to a resolution that both recognizes the impact of the significant misrepresentations made by the companies in their ads, and allows them to run viable and lawful businesses moving forward," Eric Soufer, spokesman for New York Attorney General Eric Schneiderman's office, said in a statement to ESPN.

The settlement could cost DraftKings and FanDuel between $8 million and $12 million, according to the sources.

"While we cannot comment on the details, we can confirm that we have been in ongoing settlement negotiations with the New York Attorney General's office," FanDuel spokeswoman Justine Sacco said. "They have been tough but fair, and we hope to reach an acceptable resolution."

A DraftKings spokesperson also confirmed negotiations with the attorney general's office in a statement, but "out of respect for the process, we will not comment further."

The New York Times first reported the settlement talks.

DraftKings and FanDuel blanketed the TV market with advertising leading up to the 2015 NFL season. At its peak in late August and September, the two industry leaders had an ad on national TV every 90 seconds for three straight weeks, according to iSpot.tv, which tracks advertising data.

The advertising campaign combined with a controversy over a DraftKings employee winning $350,000 playing in an NFL contest on FanDuel attracted the attention of legal authorities and lawmakers. In November, Schneiderman sent cease-and-desist orders to DraftKings and FanDuel, charging the companies with illegal gambling and false advertising.

In March, Schneiderman agreed to drop the illegal gambling charges if the companies stopped operating in New York until the state legislature passed a law clarifying the legality of fantasy sports. A bill was passed in mid-June and signed into law Aug. 3 by Gov. Andrew Cuomo.