The daily fantasy sports companies DraftKings and FanDuel are nearing a settlement agreement with New York’s attorney general over claims that they engaged in false advertising when they spent nearly a half-billion dollars blitzing the national airwaves with commercials last year, according to two people familiar with the discussions who spoke on the condition of anonymity because negotiations were continuing.
The agreement with the attorney general, Eric T. Schneiderman, was expected to cost the companies a total of $8 million to $12 million, according to the two people. It would also require the companies to acknowledge the findings of Mr. Schneiderman’s investigation into fraudulent practices and perhaps require them to institute even stronger consumer protections than those adopted in August when Gov. Andrew M. Cuomo made the games legal in New York.
DraftKings and FanDuel are so short of cash, according to the two people familiar with the negotiations, that they have asked Mr. Schneiderman’s office if they can pay the final settlement in installments, and they have conceded that they are having difficulty meeting their day-to-day obligations.
Within the past three weeks, the New York-based FanDuel has laid off more than 60 people, and both companies have acknowledged that they are months behind in their payments to vendors, especially to the array of public relations and lobbying firms that they have employed across the nation to persuade individual state legislatures to legalize daily fantasy games — the most critical component of rebuilding their business.