For Yahoo, New York's probe into daily fantasy sports is another blow

The search giant reportedly gets a subpoena from New York State's attorney general. It's the last thing the company needs as it tries to become relevant to users again.

Richard Nieva Former senior reporter
Richard Nieva was a senior reporter for CNET News, focusing on Google and Yahoo. He previously worked for PandoDaily and Fortune Magazine, and his writing has appeared in The New York Times, on CNNMoney.com and on CJR.org.
Richard Nieva
2 min read

Yahoo's daily fantasy sports service is under scrutiny, a setback for CEO Marissa Mayer as she tries to attract more people to the company's products.

Chris Farina/Corbis

Yahoo's daily fantasy sports service is under scrutiny, but the struggling company is hoping it won't be game over.

On Tuesday, New York State Attorney General Eric Schneiderman expanded his probe of fantasy sports services and issued a subpoena to Yahoo, according to a report by The New York Times. The move coincides with Schneiderman seeking an injunction against FanDuel and DraftKings that would stop them from operating in the state. But Yahoo wasn't named in the injunction filing.

Yahoo, FanDuel and DraftKings are some of the largest contenders in the increasingly popular industry of fantasy sports. These services' daily approach is a twist on traditional fantasy sports, where users follow the performance of real-world athletes to determine who wins contests between the fantasy teams they've created. With Yahoo and its competitors, players can match their teams against each other for money every day, instead of over an entire season. Regulators are beginning to say this has turned the services into illegal betting organizations.

Watch this: Our picks for fantasy football apps

Schneiderman's office did not respond to a request for comment. As of Wednesday, Yahoo's service is still operating in New York, according to its website. (Disclaimer: CNET's parent company CBS has a stake in FanDuel.)

The subpoena is a setback for Yahoo, which has been in perpetual comeback mode for years, cycling through several CEOs until it landed on former Google executive Marissa Mayer in 2012. The Sunnyvale, California-based company has struggled to attract more people to its products after falling out of fashion to rivals like Google and Facebook. But even as users have flocked to other Web services, fantasy sports has always been a big draw for the company.

Yahoo Sports Daily Fantasy, introduced in July, was a way to try to build on that success.

It still could be, but regulators have targeted those kinds of sites with intense scrutiny. In October, the Nevada Gaming Control Board ruled that all unlicensed daily fantasy sports companies must cease and desist in the state.

The services now have another new high-profile opponent. "It is plainly illegal," Schneiderman wrote in a document filed in a Manhattan trial court Tuesday.

A Yahoo spokesman said the company does not comment on legal matters but that it's closely watching the industry and believes it offers a lawful product.

Yahoo's hoping it can win that bet.