Daily fantasy sports companiesFanduel and Draftkingshave avoided a temporary shutdown in New York State. A New York Appeals Court granted an emergency stay which allows the online sites to continue operations until January 4.

Earlier on Friday, Justice Manuel Mendez of the New York Supreme Court granted a request by Attorney General Eric Schneiderman to ban the fantasy sports games in the state. The ruling ordered the companies to stop allowing New Yorkers to play, essentially shutting down the businesses.

Draftkings and Fanduel can continue to operate

Immediately after the ruling, Draftkings filed a notice of appeal and an expedited motion to stay the Court’s decision.

Draftkings claimed that a ban in New York, even temporarily, would cause significant damage to their business

The emergency stay was granted by Associate Justice Paul G. Feinman of the Appellate Division of the State Supreme Court. So, for now, Draftkings can continue business in the state. Although not confirmed, it is likely rival Fanduel will be granted a similar stay.

The ruling is just another chapter in the ongoing battle over whether the online sites should be considered unlawful gambling. Schneiderman considers the two companies illegal under New York gambling statutes and is fighting to keep them out.

New York wants fantasy sports banned

In November, his office sent cease and desist letters to the fantasy sports sites demanding they immediately stop doing business in the state.

Fanduel complied by preventing any money transfers from New York players, but Draftkings continued to operate as usual. Both Fanduel and Draftkings contend their contests are competitive games of skill and not gambling.

The attorney general argues that just because the games do require some level of skill, that doesn’t make them legal.

Uncertain conditions such as weather or injuries to professional athletes can directly affect how much a player wins or loses.

If New York eventually rules that daily fantasy sports games should be included in the law’s definition of illegal gambling, losing the state would be a considerable blow to both companies.

Together, Fanduel and Draftkings have over one million regular players in New York alone and comprise 90 to 95 percent of the daily fantasy sports market. The companies stand to lose $35 to $40 million in revenue should a ban in the state hold up.

Other states may deem daily fantasy sports illegal

A decision against the companies could give other states with similar gambling laws the green light to also ban DFS sites.

While all states have laws that define gambling, many do not specifically address fantasy sports games. For years, fantasy sports sites have contended they operate within the law through an exemption provided by a 2006 federal law that prohibits processing online financial wagering.

Yet, states like Washington, Louisiana, and Iowa still consider them illegal gambling and have banned them from doing business. Nevada says they can operate in the state, but need to acquire a state-issued gambling license to do so.

Currently other forms of gambling like lotteries, horse track betting, video slot machines and some casinos are legal in New York State. And some experts predict the state legislature will eventually legitimize the fantasy sports games.

The New York court rulings on Friday do not resolve the legal question as to the legality of online fantasy sports games. A panel of judges will make that decision in January. Until then, New York players are in luck as Fanduel and Draftkings have successfully avoided a temporary shutdown in the state.

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