FanDuel, DraftKings Are Banned In New York: Here Is A List Of Equity Investors That May Be Affected

FanDuel and DraftKings are two fantasy sport sites where users deposit money, select a fantasy roster and then compete against others for real money. The legality of these sites has been questioned, with some considering it a form of gambling.

If the sites are indeed engaged in a form of gambling, they would be required to receive the necessary regulatory approvals to operate as a gambling site in various jurisdictions.

New York Attorney General Eric Schneiderman declared the two sites illegal and ordered an immediate banning of accepting funds from users located in the state of New York.

Related Link: Concerned About FanDuel And DraftKings? Meet The Other Guys Trying To Take Over The Fantasy Sports World

"Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country," Schneiderman wrote in a cease-and-desist letter that was obtained by The New York Times. "Today we have sent a clear message: not in New York, and not on my watch."

FanDuel responded in a statement to ESPN, noting that fantasy sports is a "game of skill and legal under New York State law." The company also suggested that "the Attorney General realized he could now get himself some press coverage, he decided a game that has been around for a long, long time is suddenly now not legal."

Who Is Behind FanDuel And DraftKings?

Twenty-First Century Fox Inc FOX's Fox Networks Group owns approximately 11 percent of DraftKings, according to Deadline. The media giant participated in a $300 million round of funding during the summer.

Walt Disney Co DIS committed to investing $250 million in DraftKings and to make the site its exclusive fantasy sports partner. However, Re/code reported that Disney withdrew its quarter of a billion dollar offer, but an advertising deal on ESPN remained on the table. The New York Times separately reported that Disney had concerns that its involvement with alleged illegal gambling is counter-productive to its family friendly image.

Jason Robins, DraftKings' CEO told The New York Times that Disney informed him that it will not proceed with financing, because the site is an "adult product that doesn't necessarily fit in with their brand" and "in the end, it was better just to deal with ESPN."

Time Warner Inc TWX and Alphabet took part in FanDuel's $275 million round of financing and joined NBC Sports Ventures and Comcast Ventures as part-owners of the company, Deadline reported. The National Basketball Association (NBA) is also an equity investor in FanDuel, according to Forbes.