Top daily fantasy sports companies FanDuel and DraftKings agreed to stop taking money in New York on Monday, amid a months-long fight with the state's attorney general over whether the games are illegal gambling.
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New York Attorney General Eric Schneiderman said the companies had agreed to immediately stop operating paid contests in the state and that an appeal of an injunction against the two companies would be heard by the state's Appellate Division in September.
Schneiderman declared the games to be "nothing more than a rebranding of sports betting" and demanded the companies shut down in New York in November.
A New York Supreme Court judge issued an injunction against the companies in December, but it was later suspended by a higher court.
"New York is a critical state for FanDuel," the company - which is headquartered in Manhattan - said in a statement confirming the agreement. "While it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company."
DraftKings said it would continue to work with state lawmakers to enact legislation to make sure the games are legal.
Schneiderman said that if daily fantasy sports are legalized in New York this year, the gambling claims against the companies will be dropped. There have been bills proposed at New York state's Senate and Assembly to make the games legal.
Fantasy sports started in 1980 and surged in popularity online. Participants typically create teams that span an entire season in professional sports, including American football, baseball, basketball and hockey.
Daily fantasy sports, a turbo-charged 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.
This has enabled fans to spend money on the games with a frequency that critics say is akin to sports betting. (Reporting by Michael Erman; Editing by Andrea Ricci)