Why NY Online Sports Betting Is Safe From Lawsuits While DFS Might Not Be

Written By Mike Mazzeo on December 23, 2021 - Last Updated on March 22, 2022
new york daily fantasy sports case

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.

Legalized online sports betting in New York could launch in early 2022. Industry sources recently told PlayNY that operators are pushing hard for a January launch during the NFL playoffs. Wild-card weekend begins Jan. 15. Yet, at the same time, daily fantasy sports in NY will have its fate decided by the NY Court of Appeals starting Feb. 8, 2022 — five days before Super Bowl LVI.

So, why is this the case?

Legal difference between online sports betting and DFS

How can online sports betting be considered safe while DFS is under the guillotine?

Allow gaming legal expert John Holden to explain:

“I think that the only real distinction is that casino gaming went and got the constitutional amendment that the plaintiffs in the DFS case should’ve gotten too.

“Sports betting is only included in casino gaming because it’s traditionally been something that you’d have to go to a sportsbook in a casino to place a bet. That was why it was considered casino gaming, and included in the constitutional amendment.”

After years of litigation, the NY legislature passed a bill —ultimately signed by former Gov. Andrew Cuomo — in 2016 that legalized and regulated DFS. The 2016 law deemed paid-entry daily fantasy sports to be a game of skill not covered by gambling laws.

As per the bill, the definition of DFS is:

“A game of skill wherein one or more contestants compete against each other by using their knowledge and understanding of athletic events and athletes to select and manage rosters of simulated players whose performance directly corresponds with the actual performance of human competitors on sports teams and in sports events.”

To date, sports bettors can only wager at any of the four upstate commercial casinos:

  • Del Lago
  • Tioga Downs
  • Resorts World Catskills
  • Rivers

Nine operators have licenses via the NY State Gaming Commission (NYSGC) — FanDuel, DraftKings, BetMGM, Bally’s, Caesars, WynnBet, PointsBet, Rush Street (Rivers) and Resorts World. These operators must have their servers built at one of those four casinos. The operators will pay the casinos $5 million annually.

The Supreme Court overruled the Professional and Amateur Sports Protection Act (PASPA) in 2018, paving the way for states to legalize sports betting. PASPA, designed to protect the integrity of sports leagues in hopes of avoiding sports betting bribery scandals, had banned sports betting across the US, except in Nevada.

A year later, NY policymakers passed amended legislation to allow sports betting at the casinos, as per the NY Racing, Pari-Mutuel Wagering and Breeding Law.

Why legality of DFS is being decided in state’s highest court

The NY Court of Appeals will reargue the DFS case on Feb. 8, 2022. The hearing is happening because the judges were deadlocked at 3-3 on Oct. 5.

The reason the case is going to the NY Court of Appeals is because DFS has been deemed unconstitutional by the trial court and the appellate court.

The argument is that NY daily fantasy sports legislation violates the state constitution’s prohibition of gambling. Essentially, DFS is just another form of gambling. The New York constitution bans it unless a constitutional amendment authorizes it specifically.

PlayNY’s more expansive breakdown of the DFS case can be found here.

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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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