The Real Deal New York

DraftKings, FanDuel barred from operating in New York: ruling

Daily fantasy sports giants recently signed nearly 65K sf of Manhattan office leases

December 11, 2015 01:45PM

DraftKings FanDuel

From left: 300 Park Avenue South and 400 Lafayette Street (inset: Eric Schneiderman)

UPDATED, 4:15 p.m., Dec. 11: DraftKings and FanDuel received a temporary emergency stay after appealing this morning’s preliminary injunction, according to ESPN’s Darren Rovell, enabling them to remain operational in New York through at least the end of this year.

A New York State Supreme Court judge issued a preliminary injunction Friday barring daily fantasy sports giants FanDuel and DraftKings from doing business in the state – a decision that could impact nearly 65,000 square feet worth of Manhattan office leases the two companies signed this year.

State Attorney General Eric Schneiderman requested the injunction after issuing a cease and desist letter to FanDuel and DraftKings in November, arguing that their daily fantasy sports games constitute illegal gambling.

The matter is far from over, however, with Justice Manuel Mendez noting the injunction “does not constitute a determination of the ultimate issue.” A lawyer for DraftKings, meanwhile, said the company would immediately file for a stay of the decision and plans to appeal the ruling, according to the New York Daily News.

But it could have consequences for some big office leases the two companies recently signed — with DraftKings taking 23,500 square feet at Alvin Flaster’s 400 Lafayette Street in Noho and FanDuel recently committing to the top three floors, or 41,000 square feet, at Rockrose Development’s 300 Park Avenue South, as The Real Deal reported.

Both Boston-based DraftKings and New York-based FanDuel have since taken possession of their spaces, with asking rents for the two deals in the high-$60s and $80 per square foot, respectively.

“We feel Eric Schneiderman is a political grandstander trying to be the next governor of New York,” Flaster, who signed DraftKings to a five-year lease at 400 Lafayette Street, told TRD last month.

“I have full confidence DraftKings and its competitor [FanDuel] will squash this in court,” he added. “[Schneiderman’s] not going to shut down a blooming industry.” [NYDN]Rey Mashayekhi

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