Daily fantasy sports (DFS) is legal in New York.
In March 2022, the New York Court of Appeals deemed DFS constitutional in the Empire State. The 58-page decision was based on a 2016 state law that daily fantasy is a game of skill as opposed to a game of chance such as gambling.
This ruling came on the heels of trial and appellate courts previously ruling that DFS was unconstitutional. Now, however, NY daily fantasy sports can legally continue without interruption.
What’s more, just after the March ruling, Sen. Joe Addabbo introduced a bill amendment to expand DFS in New York. The legislation would allow for operators not operating in the state prior to Nov. 10, 2015, to obtain temporary permits and offer daily fantasy in New York.
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What is Daily Fantasy Sports (DFS)?
Fantasy sports have existed for decades. They typically consist of friends or acquaintances running a season-long league.
Fantasy league members draft athletes whom they can choose to keep on their team for an entire season. Or, they can also dump any of these athletes throughout the season and replace them with others. The goal is to create a roster with athletes who consistently perform well.
Daily fantasy sports also involve choosing athletes who do well statistically. However, one key difference is the length of these contests. DFS contests typically last between one day and a week. Therefore, you can enter many of these competitions within a short time frame.
You also need to stay under a specified salary cap when filling out lineups. For example, you might need to choose 10 players without going over $100,000.
You must pay entry fees for every contest you enter. Most of the entry goes toward a prize pool, while the site claims a small percentage as a house fee.
The two main types of DFS competitions include cash games and guaranteed tournaments.
- Cash games include “double-up” and “50/50” contests. A double-up offers the chance to double your entry fee, while a 50/50 sees you win money if you finish within the top 50% of the field.
- Guaranteed tournaments offer larger payouts relative to your entry fee. However, they only pay a small percentage of the field (e.g., 10%).
DFS sites cover several sports that can differ based on their primary customer base. US-facing operations typically feature MLB, NBA, NFL, NHL, NCAA basketball and NCAA football contests.
Is Daily Fantasy Sports legal in New York?
Yes. As noted, the New York Court of Appeals deemed DFS constitutional in a March 2022 ruling, bringing to a close a yearslong battle over the topic.
Legal daily fantasy sports started with New York Attorney General Eric Schneiderman issuing a cease-and-desist order to DFS operators DraftKings and FanDuel in November 2015. He claimed DFS was illegal gambling under state law. Schneiderman even called the DFS industry a multi-billion-dollar scheme evading the law and fleecing sports fans.
DraftKings and FanDuel sued, claiming DFS was a game of skill. State senator Michael Ranzenhofer then introduced a bill to regulate DFS as well as clarify it as a game of skill as the case moved forward.
Schneiderman maintained DFS was gambling, and really just a rebranded version of sports betting. FanDuel promised to stop serving New York customers until a court settled the issue. However, DraftKings refused to comply.
In December 2015, a court granted a temporary injunction, preventing DraftKings and FanDuel from serving residents of New York. However, DraftKings and FanDuel were granted a stay in January 2016, allowing them to continue to operate in New York while the case was on appeal.
DraftKings and FanDuel partially settled the case in 2016, agreeing to stop offering paid games in New York and abide by the results of an upcoming appeals court hearing. The New York Legislature passed laws regulating and taxing DFS operations before the case went to the appeals court.
Anti-gambling advocates did not stop their motions, however, and have received positive judicial outcomes at every level of the New York court system to this point. A 2020 legal win for those wishing to see DFS declared unconstitutional dealt a serious blow to the long-term prospects for the DraftKings and FanDuels of the world, but the state continued its appeals to the Empire State’s highest court, the New York Court of Appeals. After the Court of Appeals’ ruling that the case is subject to reargument, proponents of DFS in New York had one last chance to make fantasy sports contests a permanent legal fixture in New York.
In spring 2022, those efforts paid off as the court deemed DFS constitutional to allow operators to continue offering daily fantasy sports in New York.
What DFS contests are allowed in New York?
NY allows multiple types of daily fantasy sports contests. The market features:
- Guaranteed tournaments
- Head-to-head games
As covered before, 50/50s and double-ups see you win money by beating at least half the field. Head-to-head matches see you play a single opponent for 100% of the prize pool (minus a 10% house fee).
Guaranteed tourneys pay larger prizes to the top 10-15% of the field. These events are popular because they can offer prize pools worth six or seven figures.
For those in New York who are looking to play daily fantasy sports (DFS), you have several options.
FanDuel came onto the scene in 2009. Even though the DFS industry was in its infancy then, FanDuel took the ball and ran with it.
FanDuel was one of the biggest drivers of the industry, helping bring mainstream attention into the fold. It is also the first DFS operator to offer a live final event.
Today, FanDuel is the clear No. 1 for DFS offerings and the preferred destination for scores of players.
In terms of the number of customers and prize pools, Boston-based DraftKings is the top operator in the DFS industry.
The company debuted in 2012 and quickly gained traction with its smooth platform and innovative takes on scoring and lineups. DraftKings continues to offer new contests and additional sports options that you can’t find on other platforms.
What’s the difference between DFS and sports betting?
The two largest DFS operators — DraftKings and FanDuel — also offer legal sports betting and are becoming industry leaders there as well.
There is plenty of crossover appeal between DFS and sports betting; however, there are some distinct differences between the two. Let’s take a look at a few of the biggest:
Individual vs. team performance
In DFS, the focus is on individual player performance. As long as a player goes off and puts up a lot of fantasy points, all is well for you.
For sports bettors, they’re generally more concerned with overall team performance and whether they will win or lose.
Of course, the exception comes with prop betting, which are wagers which can revolve around individual player performance.
Both DFS and sports betting are challenging, only for varying reasons.
In sports betting, it’s essentially bettor versus the house. If you are correct, you win; however, consistently beating the oddsmakers is no small task.
For DFS, you are competing against others with the best scores winning. In the largest tournaments, there can be tens of thousands of others competing to do the same.
The DFS industry has grown dramatically from the early days. In the beginning, it was all about the major team sports.
New DFS options have emerged in recent years, including for the major individual sports. While there are now more options than ever, it still pales in comparison to the offerings at major sportsbook operators, as the action is available on all sports with at least decent levels of interest.
While differences abound, there are several similarities between the two pastimes, too, including the following:
Research skills translate
For sustained success in either DFS or sports betting, sound research skills are a major piece of the puzzle.
At a minimum, players of both will need to have some useful resources they can lean on as they narrow down their lineups.
For those who do a lot of their research, they’ll find that the skills translate well. While the focus is different for both, shifting gears isn’t too difficult of a trick.
Risk vs. reward
In DFS and sports betting, you are putting your hard-earned dollars to work in hopes of making a profit. There’s risk involved for both, as nobody wins all the time. Highly skilled users in both pastimes will profit more than others, but everyone is going to take some lumps along the way.
Understanding the risk-versus-reward relationship is a standard part of the game for both DFS and sports betting.
Prediction of future outcomes
For both DFS and sports betting, the name of the game is right more often than you are wrong. In both cases, that’s easier said than done.
Betting on sports or building a DFS lineup means that you are mainly predicting the future. Regardless of how great you are at projecting things, the significant unanswered variable that you can’t account for is what will happen once the game begins.
When it comes to users in New York, perhaps the most significant difference to consider is that it’s legal to play DFS online, but online sports betting is not.
Which sports can you play DFS?
In the early days of DFS, the main games revolved around the major team sports. Today, the options have significantly expanded.
You can even play DFS on major individual sports. Let’s take a look at the biggest needle-movers:
- NFL DFS: NFL season is the busiest time of the year for DFS operators. Professional football attracts the most interest. For DFS, that translates into massive prize pools and plenty of games.
- NHL DFS: While not quite at the level of NFL or NBA, hockey lovers will find plenty of NHL DFS action. The fields are smaller for the larger tournaments, so those who have a knack for pucks can have success.
- MLB DFS: Major League Baseball keeps the DFS world humming through the spring and dog days of summer. There’s action to be found all the time, as the daily MLB schedule is generally full during the season. Matchups are vital for all of DFS, but that’s especially true here.
- College football DFS: For college football fans, Saturday is the best day of the week. The day gets better when you add DFS to the mix. Similar to hockey, this doesn’t attract the masses, but those who specialize may find themselves a solid niche here.
- College basketball DFS: College basketball season gets better as it moves along, but the action heats up come March Madness time. You can play DFS hoops every step of the way, but the bigger prize pools come when more folks are paying attention.
- Soccer DFS: Soccer is similar to hockey in that it has a loyal and passionate following. You either get it or you don’t. For DFS purposes, that translates into smaller tournaments than the major sports, but plenty of competition from a devoted set of users.
- Golf DFS: If there’s a golf tournament going on, you can build out a lineup and have some skin in the game. Major tournaments, such as the Masters, have become popular DFS events.
- Tennis DFS: Just like golf, you can build out some lineups as tournaments are going on. The same applies to more significant events, such as Wimbledon, bring the most players into the pool.
- UFC DFS: UFC has an incredibly loyal and passionate DFS following. DFS players use fighters on the card to build lineups, and points are generated by what they do in the octagon.
- Niche DFS: You’ll also find some other sports options out there, such as NASCAR and e-sports. DraftKings also offers games that revolve around arena football, the Canadian Football League, the European Golf Tour and EuroLeague basketball.
How popular is daily fantasy sports in New York?
New York is the fourth-most populous state in America, and professional sports is as popular in the state as anywhere in the country. It is a huge market for DFS. Considering the legislation passed in 2016, it is also a precedent-setting state for the industry.
Estimates suggest DFS sites are pulling in as much as $15 million in revenue from New York sports betting players. In fact, the state is responsible for almost 10 percent of all DFS contest entry fees in the United States.
It is estimated New York has more than 90,000 active DFS players. Those players are responsible for more than $150 million in annual entry fees, the second most of any state, trailing only California.
NY DFS laws and regulations
There are a number of regulations, fees, and taxes associated with DFS operations in New York. The New York law that legalizes, regulates, and taxes DFS:
- Gives regulatory control to the New York State Gaming Commission
- Forces licensed operators to pay 15 percent tax on gross revenues, and another 0.5 percent tax with a cap of $50,000
- Establishes a minimum player age of 18
- Bars DFS contests involving collegiate sports and horse races.
- Exempts DFS from the parts of the New York penal code dealing with gambling.
- Puts a number of consumer protections in place
Schneiderman came out of the gate swinging when it came to DFS.
He called DFS illegal gambling, and claimed DFS operators were running a multi-billion-dollar scheme evading the law and fleecing sports fans. He followed that up with a claim DFS was just a re-branded version of sports betting.
Schneiderman issued a cease-and-desist order to the biggest DFS operators in the country, and defended it when they sued. However, as it became clear state lawmakers were going to pass legislation taxing and regulating DFS, Schneiderman began to soften.
He reached a settlement with DraftKings and FanDuel in advance of a legal appeal and new legislation passing. Once the legislation passed, he took on a new position, issuing the following statement:
“As I have said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law. Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend. We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud.”
In the end, Schneiderman also settled the false advertising and consumer fraud claims, forcing DraftKings and FanDuel to pay $6 million each in penalties.
Unfortunately, the 2016 law continued to draw fire from opponents, claiming that it was unconstitutional under New York’s foundational document. Lawmakers in the Empire State do not have carte blanche to enact gambling laws as they see fit. Expansions must be put to voters. The state had attempted to classify DFS as a skill game in order to evade the requirement, but New York judges at multiple levels were not sympathetic to state’s arguments to this point.
In the end, though, the New York Court of Appeals ruled that daily fantasy sports was in fact a game of skill as opposed to a game of chance. As a result, the court deemed DFS constitutional.