DraftKings, FanDuel lose early bid to head off NY shutdown

(Repeats with no changes) By Brendan Pierson and Michael Erman NEW YORK, Nov 16 (Reuters) - Daily fantasy sports companies DraftKings and FanDuel on Monday lost an atttempt to head off the New York attorney general's effort to shut down the companies in the state. A New York state judge denied temporary restraining orders sought by the companies that would have halted New York Attorney General Eric Schneiderman's efforts to declare the games illegal gambling in the state. Schneiderman said the games were against state law last week and told the companies to stop taking money from New Yorkers. The government will move for an injunction against the companies which will be heard in a state trial court on Nov. 25. In seeking the restraining orders, the companies said that Schneiderman's office had been pressuring their vendors to stop doing business with them, and they could be forced to close up shop in the state. "DraftKings and FanDuel are operating illegal gambling operations," said Matt Mittenthal, spokesman for Schneiderman. "It should come as no surprise that companies associated with DraftKings or FanDuel are actively reviewing this matter in the context of business decisions." New York has more daily fantasy sports players than any other U.S. state, according to Eilers Research, so being forced to shut down there could cripple the fast-growing, multibillion-dollar industry. The order is the latest threat to daily fantasy sports. The two companies have become the subject of congressional inquiries as well as a ban in Nevada after spending hundreds of millions of dollars on television advertising in 2015. DraftKings has continued to operate as usual in New York despite the pressure from Schneiderman's office. The Boston-based company said it is confident in its legal position. FanDuel stopped taking new deposits from players in New York on Friday but allowed New Yorkers to play in games over the weekend with money they had already deposited. A spokeswoman on Monday said that the company is running two to three days behind payouts to players withdrawing their money due to a new identity verification system. RUSH TO JUDGMENT? DraftKings has accused Schneiderman of trying to act as "judge, jury and executioner" in his dealings with the company, especially in his attempts to compel the company's business partners to stop processing payments from New Yorkers. "I'm not easily shocked, but this has been a shocking, irresponsible, irrational and illegal rush to judgment," DraftKings lawyer Randy Mastro said in court. Earlier on Monday, a New York state senator introduced legislation that, if passed, would exclude daily fantasy sports from the state's definition of a game of chance and deem them games of skill, which are legal in the state. The level of support for the bill, introduced by Republican Michael Ranzenhofer, is unclear. What's more, the state's attorney general would likely challenge such a law on the basis that it violates the state constitution's gambling prohibition, said Karl Sleight, an Albany, New York-based gaming lawyer. The process of amending New York's constitution to allow for an exception could take years, Sleight said. Modern fantasy sports started in 1980 and have mushroomed online. Participants typically create teams that span an entire season in professional sports, including American football, baseball, basketball and hockey. Daily fantasy sports, a turbocharged version of the season-long game, have developed over the past decade. Players draft teams in games played in just one evening or over a weekend. The companies may have painted targets on their backs through aggressive advertising at the start of the National Football League season that promised large winnings. FanDuel has said it planned to pay out $2 billion in cash prizes this year. (Additional Reporting by Suzanne Barlyn; Editing by G Crosse and Cynthia Osterman)