FanDuel and DraftKings to pay out $12m for deceptive advertising

Two daily fantasy sports companies, FanDuel and DraftKings, have agreed to pay $6m each to the New York general attorney’s office for to settle a lawsuit against them for engaging in deceptive advertising practices.

“Today’s settlements make it clear that no company has a right to deceive New Yorkers for its own profit.” New York Attorney General Eric T. Schneiderman said upon the news of the settlement. “DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers. These agreements will help ensure that both companies operate honestly and lawfully in the future.”

The enquiry found that both companies misled players about their chances of gaining a positive return on their bets, when most players would lose money over time. Both companies also misinformed players about the substantial advantages that professional players hold over amateur players through the use of automated computer scripts, algorithms and complex statistical and game-theory strategies.

FanDuel spokeswoman Justine Sacco said: “As previously stated, the negotiations were tough but fair, but we are very pleased to have reached a resolution as this allows us to focus on our busiest time of year with N.F.L., N.H.L. and soccer in full swing and N.B.A. season starting tonight.”

The settlement appears to have had a financial effect on both operators. FanDuel has recently let go over 60 employees, and both companies have admitted they are in debt to their vendors. This financial blow may be the deciding factor for the two companies to return to the table to discuss a merger.