After a long and arduous legal battle, operators of daily fantasy sports in New York can finally exhale.
In its Tuesday ruling, the New York Court of Appeals deemed DFS constitutional.
In a 58-page decision written by Chief Justice Janet DiFiore, the Appeals Court essentially ruled that — under a 2016 state law — DFS is a game of skill as opposed to a game of chance, i.e., gambling.
The judge’s vote proved to be 4-3.
Judges DiFiore, Madeline Singas, Anthony Cannataro and Hector LaSalle voted that DFS was constitutional. However, judges Rowan Wilson, Jenny Rivera and Shirley Troutman voted that DFS was unconstitutional.
What this means for daily fantasy sports in NY
Trial and appellate courts had previously deemed DFS unconstitutional. It even needed to be reheard in the NY Court of Appeals on Feb. 8 after the judges were initially deadlocked, 3-3, on Oct. 5, 2021.
But in the end, DFS can continue in NY without issue.
NY Court of Appeals legal expert Rob Rosborough, who has been following the case for several years, said:
“It’s a good day for DFS. The plaintiffs took a big swing and they missed. It’s a sigh of relief for the big DFS operators in NY. They’re definitely wiping sweat from their brows.”
If DFS did not receive a favorable ruling, achieving legalization in New York would have necessitated a constitutional amendment. And to get that accomplished, it would require bills from two successive legislatures, plus a public vote. After all that, when could have New York authorized DFS? November 2023.
FanDuel, a legal sportsbook operator that also offers DFS games, released a statement regarding the ruling:
“New York state is FanDuel’s home and our New York customers have enjoyed playing daily fantasy for years. We are pleased that New Yorkers will continue to have access to fantasy sports contests.”
DraftKings added via statement:
“We are pleased with the Court’s decision, which ensures New Yorkers can continue to enjoy DraftKings’ industry-leading fantasy sports product.”
And from Fantasy Sports & Gaming Association:
“With the decision, the over 3.5 million fantasy sports enthusiasts in New York will continue to be able to play all the games they love. Accordingly, the FSGA hopes that the New York Gaming Commission will move quickly to finalize preliminary rules and regulations that were issued in Feb. 2017. The lack of final regulations has kept many FSGA member companies from offering contests in the state since only companies that were operating in New York State before Nov. 10, 2015 were allowed to re-enter the state on a temporary permit.”
Game of skills vs. games of chance worlds avoid collision
Yes, a world could’ve existed where online sports betting in NY was legal, but DFS was illegal.
Fortunately, the state avoided that potential disaster.
DiFiore wrote in her decision:
“Because ample support exists for the legislature’s determination that the DFS contests authorized in Article 14 are properly characterized as lawful skill-based competitions for prizes under our precedent, plaintiffs have not met their burden to demonstrate beyond a reasonable doubt that Article 14 is unconstitutional.”
Rosborough explained that the NY Court of Appeals determined that a dominating element test is required (as the state argued) to decide what constitutes gambling as opposed to a material degree test (which the plaintiffs argued):
“As long as you have skill predominating over chance or you have a skill-based game where you pay entrance fees and the pot doesn’t change, in the end, that’s enough to be outside the scope of the gambling prohibition in New York,” Rosborough said.
In the end, the deciding vote essentially came from Judge LaSalle. LaSalle was a fill-in judge from the second division, given that Judge Garcia had previously recused himself. Judge Troutman (unconstitutional) ended up ruling the same way Judge Fahey (forced retirement) had.
“It was a crazy ride for DFS operators,” Rosborough said. “They were operating under a cloud of uncertainty because each court that had decided this issue before here said that DFS was unconstitutional. This was the last stop.
“I sort of thought this is the way that this is the way this should come out, and I’m just happy to see that it actually happened. Because otherwise, you’d be going back every time there needed to be some sort of innovation in the gaming space in New York. The legislature now has clear marching orders that they have to follow when they’re authorizing games like this.”
Does ruling create a path for NY online poker?
Many have wondered if this decision creates an easier path for legalizing online poker in New York. After all, some could argue poker also stands as a game of skill as opposed to a game of chance.
Sen. Joe Addabbo recently introduced a bill to authorize online casino gaming in NY, which he believes under the legislative language includes online poker. That bill, however, may have a better chance of inclusion in next year’s budget.
“I don’t think the DFS case has anything to do with online poker,” Rosborough said. “It’s a completely different analysis. They already have a constitutional amendment (from 2013), so they can look at and say, ‘No, look; we’ve already authorized it under the constitution. We’ve changed the constitution to offer it.’”