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DraftKings, FanDuel allowed back in NY under new law

Daily fantasy sports sites return to the Empire State but still face legislative battles in other states.

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CHICAGO, IL - OCTOBER 16: The fantasy sports website DraftKings is shown on October 16, 2015 in Chicago, Illinois. DraftKings and its rival FanDuel have been under scrutiny after accusations surfaced of employees participating in the contests with insider information. An employee recently finished second in a contest on FanDuel, winning $350,000. Nevada recently banned the sites. (Photo illustration by Scott Olson/Getty Images)
Scott Olson, Getty Images

It's finally game on for daily fantasy sports in New York.

DraftKings and FanDuel will be able to operate legally in the Empire State after Gov. Andrew Cuomo on Wednesday signed into law a bill legalizing daily fantasy sports websites. Cuomo's signature ends a contentious nine months for the sites that began in November when New York Attorney General Eric Schneiderman issued cease-and-desist letters to the companies.

"Daily fantasy sports have proven to be popular in New York but until now have operated with no supervision and no protections for players," Cuomo said in a statement. "This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections and more funding for education."

The daily fantasy sports industry has experienced huge growth in recent years, generating an estimated $2.6 billion in entry fees in 2015 alone, according to Eilers Research. But that rapid growth has been dogged by questions about how such contests, which offer cash prizes to contestants who compete in abbreviated daily versions of the traditional season-long fantasy sports leagues, might be violating state gambling laws.

The new law goes into effect as many states have found the industry to be in violation of state gambling laws. Laws in at least six states prohibit their residents from playing daily fantasy sports games.

Supporters say that building hypothetical rosters from real sports players and accumulating points based on their performance is a game of skill, not chance, and not subject to laws that govern games such as poker. But opponents argue that the games are illegal because they depend on factors outside of players' control.

FanDuel CEO Nigel Eccles said he hoped other states would follow New York's lead.

"With the future of fantasy sports affirmed in New York, we expect our legislative momentum will only accelerate as more states address the issue," Eccles said in a statement.