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Judge blocks operations of daily fantasy sports sites in NY

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2 Point Lead: DraftDuel

NEW YORK (AP) -- A judge on Friday barred daily fantasy sports sites DraftKings and FanDuel from doing business in New York, ordering the country's two biggest fantasy sports companies to stop taking bets after the state's attorney general argued their operations were illegal gambling.

State Supreme Court Justice Manuel Mendez's order siding with Attorney General Eric Schneiderman comes amid increasing debate about whether customers who participate in the popular online fantasy sports games are competitors or bettors.

Mendez noted in the order that the sites were still allowed to operate in other states where allowed.

SEE MORE: DraftKings, FanDuel back regulations proposed by Mass.

"The balancing of the equities are in favor of the NYAG and the State of New York due to their interest in protecting the public, particularly those with gambling addictions," Mendez wrote.

Schneiderman had argued that the sites were placing bets labeled as "entrance fees" to make it seem like it wasn't gambling.

Messages seeking comment from Boston-based DraftKings and New York-based FanDuel were not immediately returned.

The companies have 30 days to respond.

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DraftKings/FanDuel fantasy sports investigation
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Judge blocks operations of daily fantasy sports sites in NY
The DraftKings Inc. app is arranged for a photograph on an Apple Inc. iPhone in Washington, D.C., U.S., on Sunday, Oct. 4, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Andrew Harrer/Bloomberg via Getty Images
The DraftKings Inc. website is arranged for a photograph on an Apple Inc. iPad in Washington, D.C., U.S., on Sunday, Oct. 4, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Zia Morales/Bloomberg via Getty Images
The FanDuel Inc. app and DraftKings Inc. website are arranged for a photograph in Washington, D.C., U.S., on Monday, Oct. 5, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Andrew Harrer/Bloomberg via Getty Images
The DraftKings Inc. logo is arranged for a photograph on an Apple Inc. iPhone in Washington, D.C., U.S., on Sunday, Oct. 4, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Andrew Harrer/Bloomberg via Getty Images
The FanDuel Inc. and DraftKings Inc. apps are displayed on an Apple Inc. iPhone in Washington, D.C., U.S., on Sunday, Oct. 4, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Andrew Harrer/Bloomberg via Getty Images
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Last month, Schneiderman sent Boston-based DraftKings and New York-based FanDuel cease-and-desist letters after it was revealed in October that a DraftKings employee won $350,000 in a fantasy football contest hosted by FanDuel, raising questions about insider training. The companies have since prohibited their employees from playing on rival sites and conducted an internal probe, saying there was no cheating.

In a court hearing last month before Mendez, lawyers for both companies argued daily fantasy sports were highly competitive games of skill and submitted numerous affidavits by game theory and mathematics professors who detailed how only a few players win a vast majority of the time.

But the attorney general's office said that alone wasn't enough to make the games legal, since ultimately how customers fare depends on events out of their control, such as professional athletes' injuries, weather or even blown calls.

Other states have moved to regulate the online daily fantasy sports companies after both DraftKings and FanDuel mounted an aggressive advertising campaign ahead of the 2015 NFL season. In Massachusetts, lawmakers have proposed specific regulations to protect consumers while regulators in Nevada have restricted their business to existing casinos.

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