DraftKings, FanDuel Fined $2.6M For Unfair Practices

DraftKings and FanDuel will pay a combined $2.6 million as a settlement for unfair and deceptive practices affecting fantasy sports consumers.

Reuters reported news that Massachusetts Attorney General Maura Healey announced the settlement of the lawsuit on Thursday, which is the result of a probe that predated her office’s adoption of regulations in 2016 to govern daily fantasy sports. Each company will pay $1.3 million.

The new regulations include prohibiting people under the age of 21 from playing paid fantasy sports games and placing restrictions on how the games are advertised and promoted. In addition, promotions of paid fantasy sports on high school and college campuses are now prohibited, and professional athletes, agents and others connected to pro sports are barred from participating in paid fantasy contests related to their sports.

“I am glad to have reached these settlements to address various consumer issues that existed at the early stages of this new industry,” Massachusetts Attorney General Maura Healey said in a statement.

DraftKings General Counsel Tim Parilla said the company was pleased to have reached a settlement on the lawsuit and conclude what had been a “productive and collaborative process” with Healey’s office. FanDuel also said it had worked closely with Healey during her office’s review of fantasy sports.

In July, DraftKings and FanDuel abandoned a planned merger following a lawsuit by the U.S. Federal Trade Commission (FTC). Between them, the two companies have 95 percent of daily fantasy sports, and the FTC had called for a preliminary injunction to prevent the companies from closing the deal while it conducted an internal review to determine if the merger was legal under antitrust law.

In practice, if companies are slapped with a preliminary injunction, they normally terminate a merger because deals cannot be held together during the lengthy internal process.

The two companies have also faced regulatory challenges in several states, as well as scrutiny over whether the paid daily games on the sites amounted to gambling.