New York court ruling deems Daily Fantasy Sports to be illegal

A court ruling in New York has deemed Daily Fantasy Sports (DFS) to be a ‘game of chance’. This would make the vertical illegal under current state regulations.

The decision was made in an appeals court last Thursday.

Disputed

The decision disagrees with a law which was passed by Governor Andrew Cuomo, back in August 2016. Back then, he stated that DFS did not equal gambling. This was because a large part of being good at such contests involves skill.

However, not everybody viewed it in the same way. Two months later, state residents put forward a dispute. These challengers said that they had been harmed by gambling.

According to the above individuals’ lawsuit, Cuomo’s legislation had created an illegal exemption within within the State Constitution. This prohibits gambling with the exception of a few verticals, namely a limited number of horse racing tracks and casinos.

The disputers also argued that legalising DFS would need to be decided by state voters.

What happened next? 

Acting Justice Gerald W. Connolly of the Albany County Supreme Court agreed with some of the lawsuit in 2018. He said that the extent to which this law regulated DFS violated Constitution gambling bans.

Despite this, the court also determined that the Legislature’s exemption of DFS from the penal code was performed properly.

And then, last week, it was determined that the vertical – although it requires some skill – also needs some luck. These include factors such as player injuries, poor officiating or bad weather.

Impact on operators 

New York is an important market for various DFS operators. This includes the likes of FanDuel, DraftKings and Yahoo.

Should there be an appeal, contests will still be permitted until a final decision is made. But if that is unsuccessful, then these brands could suffer a hit on their revenue. It could also be problematic for New York as a state, since it’s currently suffering from a growing budget deficit.

After the court’s decision, FanDuel released a statement. In this, it said that it “expects” an appeal will be made. The operator also said that “we’ll be able to offer contests while that appeal is decided”.

DraftKings, which also operates a sportsbook in multiple US states, also commented on the matter. In their statement, the company referred to the legalisation of DFS here as “constitutional”. It also argued that said decision was “in the best interests of taxpayers and fantasy sports fans”.