Daily Fantasy Probe Finally Catches Up With Yahoo

Games Become Yahoo's Latest Headache

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Marissa Mayer, president and CEO of Yahoo, listens during the 2015 Fortune Global Forum in San Francisco on Nov. 3.
Marissa Mayer, president and CEO of Yahoo, listens during the 2015 Fortune Global Forum in San Francisco on Nov. 3. Credit: David Paul Morris/Bloomberg

New York Attorney General Eric Schneiderman has subpoenaed Yahoo about its daily fantasy sports business, according to a source familiar with the matter. On Tuesday, Schneiderman also asked a court to prohibit DraftKings and FanDuel, the startups that dominate the daily sports industry, from operating in the state.

Yahoo hadn't previously been a part of Mr. Schneiderman's investigation into the industry, which he argues equates to illegal gambling. The Silicon Valley firm stayed away from advertisements that promise players quick riches, which were a mainstay for DraftKings and FanDuel in recent months. It also wasn't involved in allegations that a DraftKings employee used confidential information to win hundreds of thousands of dollars on FanDuel.

Still, what Yahoo offers is essentially the same as what its competitors do. Because Mr. Schneiderman's core argument is that daily fantasy games are games of chance, not of skill, it's hard to see any substantive difference between Yahoo's operations in the New York and that of other daily fantasy sports companies.

"Yahoo does not comment on legal matters. We are monitoring industry trends and events closely and believe that we offer a lawful product for our daily fantasy sports users," a company spokesman said.

Daily fantasy sports companies have reacted to Mr. Schneiderman's actions in varying ways. Many smaller operators pulled out of the state even though they had not had any direct contact with the attorney general's office. FanDuel first decided to bar New Yorkers from adding new money to their accounts, then said Tuesday it would stop all state residents, even those with existing and funded accounts, from playing its games.

DraftKings, by contrast, claims it still have full legal authority to operate in the state and continues to offer games as usual. Yahoo will continue to offer games in New York, at least for now.

-- Bloomberg News

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