New York State Court Of Appeals Hears Rearguments For Legalization Of Daily Fantasy Sports

Written By Mike Mazzeo on February 8, 2022 - Last Updated on March 22, 2022
DFS Legal New York

Editor’s Note: On March 22, 2022, DFS games were deemed legal in New York by the NY Court of Appeals. Read on for more details here.

The legal fate of daily fantasy sports will soon become clearer in New York state.

The New York State Court of Appeals on Tuesday heard rearguments surrounding the constitutionality of a law that had legalized DFS in the state. It is possible that, by March 2022, DFS could be deemed illegal in the state while NY online sports betting remains legal.

But a question asked by a fill-in judge during Tuesday’s case gives one legal expert reason to believe the court will deem DFS as constitutional.

Rearguments ordered for future of legal DFS in New York

This all stems from a trial and appellate court deeming a 2016 law regulating DFS as unconstitutional. The argument is that NY daily fantasy sports regulation violates the state constitution’s prohibition of gambling.

Before the 2016 law, former New York Attorney General Eric Schneiderman issued cease and desist letters to DFS companies DraftKings and FanDuel for serving the state as “illegal gambling” in 2015. The operators pulled out of the state until the legislature formally legalized and regulated DFS. That law has been at issue in the NY court system ever since.

Essentially, lower courts have held that DFS is just another form of gambling. A game of chance as opposed to a game of skill. As such, the New York constitution prohibits the vertical unless a constitutional amendment authorizes it.

A second hearing was needed because the judges were deadlocked at 3-3 in October 2021. Only six judges voted in the first hearing — rather than the usual seven — because Judge Michael Garcia recused himself.

Where does New York DFS stand among judges?

Based on their questioning in previous hearings, Judges Jenny Rivera and Rowan Wilson appear opposed to the DFS law. Judge Eugene Fahey sat in the same camp, but mandatory retirement pulled him from the bench.

Judge Shirley Troutman, who replaced Fahey on the bench, didn’t speak during Tuesday’s arguments. As a result, it remains unclear as to how she’ll vote. But Judge Hector LaSalle from this second division, who is filling in for Garcia, asked the plaintiff a telling question. One that might indicate how he’s leaning, according to New York State Court of Appeals legal expert Rob Rosborough.

“He didn’t say anything when the state was up, he just sort of listened to the argument when the state was peppered with questions from Judge Rivera and Judge Wilson just like they did the first time around,” Rosborough told PlayNY. “Then the plaintiff stood up and the first question was from Judge LaSalle: Isn’t it your burden to show or demonstrate that you can satisfy the heavy burden to show unconstitutionality beyond a reasonable doubt?

“And what he said was I looked at your summary judgment papers, and I didn’t see any evidence introduced by you in there that would help satisfy that burden that this isn’t a skill-based game.”

Two questions stand out about legal DFS in New York

Rosborough has studied this case for four or five years now. And to him, two questions have stood out.

  1. What is the standard of review that applies: Is deference owed to the legislature?
  2. What does it mean to have a material degree of chance?”

“Judge LaSalle was really getting at that first question,” Rosborough said, “saying if the standard is you have to prove beyond a reasonable doubt that what the legislature did was unconstitutional, don’t you have to introduce some evidence to say that rather than relying on your word interpretation of what it means to be gambling?”

As Rosborough noted, it’s possible that Judge LaSalle could surprise with his vote. But, Rosborough said: “The question was so specific and obvious that he wrote it well in advance that he wanted to ask the plaintiffs this question about their proof on summary judgment and the standard that applies. It seems to me that he’s leaning on the DFS is constitutional side.”

Chief Judge Janet DiFiore, Judge Anthony Cannataro and Judge Madeline Singas are all expected to favor of DFS legalization. LaSalle would give DFS the four votes necessary to win the case, regardless of what Troutman decides.

The defense’s argument of DFS as a skill game hinged largely on DFS players serving as general managers of sorts. They make calculated determinations on personnel for their contests while navigating salary-cap restrictions.

If deemed unconstitutional, DFS legalization could take two years for the legislature to create a constitutional amendment.

Photo by AP / Mark Lennihan
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Mike Mazzeo

Mike Mazzeo is a contributing writer for PlayNY, reporting on legal sports betting in New York while covering the potential legalization of NY online casinos and poker. He previously wrote for ESPN, the New York Daily News and The Ringer, among others.

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