Martha Coakley, a lawyer for Foley Hoag, which is representing DraftKings, said that ever since Schneiderman made the announcement that he was looking into the DFS business models, DraftKings has been open to explaining its company and being as transparent and cooperative as possible. Though there had been a few conversations and inquiries, Tuesday night's letter was "not really anticipated."
Coakley noted that DraftKings has five days to legally respond to the letter, which will give consumers plenty of notice whether or not they will be able to play in this week's contests.
"It came as a surprise and a huge disappointment," she said. "They don't feel that he had taken the time to make the decisions he made. Obviously, it has a huge impact on this new, smart industry."
Sabino, who is also a professor of law at St. John's University Tobin College of Business and specializes in complex business litigation, said that since Schneiderman has not filed an injunction, there is no legal reason stopping DraftKings and FanDuel from operating as usual. He added that if Schneiderman makes the decision to get the injunction, he still has to convince a more than likely "skeptical" judge that he will be able to win a case. Even if Schneiderman does take the case to court, it will probably go through years of appeals through the New York system, with the case going in front of 13 judges who will each have their take on what constitutes gambling.
Consumers' Research's Colangelo believes that what may hurt DFS operators is the tone of their advertising. Although they preach about being skill games, their ads talk about how easy it is to take a chance so you can be a millionaire.
"When you are creating new industries, so much of your ability to succeed in the marketplace has to do with your perception," Colangelo pointed out.
But, even if the sports are deemed gambling, Sabino pointed out that it does not mean DFS is done for good. More than likely if the DFS operators lose, it will mean that the state government will be able to collect taxes from the games. He likened it to when the state legalized the lottery and turned it into a revenue driver.
"I think it goes without argument that the athletes on the field, it's all skill for them, but is it skill for you and I as armchair quarterbacks to pick who does well?" Sabino said. "This is a collision between sports and money and politics and big business in America."