DraftKings are prepared to fight in court against New York state’s top prosecutor, who said that they were running illegal gambling operations and ordered them to stop taking bets in the state.
In the games, fans pay to compete for daily cash prizes based on imaginary teams assembled from rosters of real players, which accumulate points based on how those players perform in actual games. This has enabled fans to spend money on the games with a frequency that critics say is akin to sports betting.
DraftKings is a private companies with valuations of more then a billion dollars.
High-profile investors poured money into both this year.
DraftKings raised $300 million from investors including Fox Sports, Major League Baseball, the National Hockey League, the Madison Square Garden Company, the Raine Group and Wellington Management. Around the same time, FanDuel raised $275 million from investors such as private equity firm KKR & Co LP, Google Capital and the venture arms of Time Warner Inc and Comcast Corp.
DraftKings and FanDuel have both hired former New York prosecutors for advice as scrutiny by regulators and law enforcement agencies intensifies.
FanDuel’s lawyer, Sharon Cohen Levin, previously headed the money laundering and asset forfeiture unit at the U.S. Attorney’s Office for the Southern District of New York. She was not immediately available for comment. Avi Weitzman, who represents DraftKings, spent seven years in the same office. Weitzman declined to comment.
Both companies have hired lobbyists in Washington.
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