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FanDuel, DraftKings near settlement with NY

The two fantasy sports companies have been under investigation for alleged fraudulent business practices.

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Fantasy sports websites DraftKings and FanDuel are close to an agreement with New York's attorney general.

Screenshot by Joshua Goldman/CNET

Daily fantasy sports sites are now legal in New York, but FanDuel and DraftKings still aren't in the clear.

Fantasy sports betting was legalized in the state in August following a shutdown earlier in the year. However, the two sites have still been also under investigation by New York Attorney General Eric Schneiderman for allegations of fraudulent advertising practices sparked by campaigns that highlighted get-rich-quick prize payoffs. The parties are near a settlement under which the companies would pay a total of $8 million to $12 million, the New York Times reported Sunday.

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

"We can confirm that we are in discussions with the New York Attorney General's Office to conclude the settlement that we entered into last March, but out of respect for the process, we will not comment further," a DraftKing spokesperson said via email to CNET.

Both companies are suffering financially and may need to merge to stay alive, the New York Times reported, with both sites behind on payments to vendors and FanDuel having let go more than 60 employees recently.

First published at 7:30 a.m. PT on October 24.
Update, 9:30 a.m. PT: Adds comment from DraftKing.