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Daily Fantasy Sports in NY Jeopardized with 2nd Strike

NY Map

New York poker fans have certainly been having a hard time of it lately, with no movement made on the status of regulating online poker sites by the end of 2019. Yet, it seems as though another sector of the online gaming industry has been targeted in recent time. Daily Fantasy Sports (DFS) could now be in jeopardy of becoming illegal within The Empire State, following the February 2020 upholding of a decision from 2018 that ruled it as being unconstitutional.

NY Daily Fantasy Sports has been declared unconstitutional

Original and New Rulings on DFS

Courtroom Gavel

On Oct. 26, 2018, the Acting Supreme Court Justice Gerald W. Connolly made a ruling that DFS contests actually fall under constitutional prohibitions against gambling. Essentially, that overruled any kind of opinion on DFS being games of skill. Connolly went on to say that the state of New York unlawfully expanded gambling in 2016 by classifying DFS as being a skill game.

Now, that same ruling from 2018 has been upheld as of Thursday, Feb. 6, 2020 by the New York Supreme Court's Appellate Division with Justice Robery Mulvey authoring the majority opinion. Therefore, DFS could now be considered as an illegal activity within the state.

Robert MulveyJustice Robert Mulvey of the NY Supreme Court, Appellate Division

At the heart of this dispute is the fact that lawmakers within New York are not allowed to just expand gambling as they wish. Instead, the state constitution requires any such expansion to be put to a ballot box for voters to approve of it, which was not done in the case of fantasy sports. It was through this voter-approval mechanism that commercial casinos became a legal option in 2013.

In 2017, DFS was called into question in New York, although the legality of the sites being operational there wasn’t being challenged. Instead, a scandal was unleashed, which said that some employees of two of the major providers were using inside information in a bid to gain an advantage on their competition. This caused an investigation to take place, with the N.Y. Attorney General Eric Schneiderman sending letters to both DFS sites – DraftKings and FanDuel – seeking answers regarding the scandal.

State Constitution and Terms Relating to Gambling

After the legislature went on to legalize Interactive Fantasy Sports (IFS) in 2016, some grumbled that lawmakers hadn’t sent the new law out for the approval of the voters, stealthily attempting to circumvent the constitution's ban on gambling. Instead, they had proceeded to carve the IFS rules from the existing gambling prohibitions at the legislative level.

After the law was passed, a group of private citizens went on to seek an injunction against The Empire State and Governor Andrew Cuomo (D). Yet, even with the fact that legislative enactments have a statutory “presumption of constitutionality” attached to them, the state’s Supreme Court ruled that the new law is actually invalid.

Unfortunately, the state constitution does not go in-depth on the meaning of “gambling” in any way. Instead, lawmakers and jurists actually have to rely on the definition that comes from the penal code. This lays out the three key elements of gambling games, which are prize, chance and consideration. The relevant section of the statutes states that:

A person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.

However, within the same section of code, there is the statement that an element of chance must only be in existence to “a material degree.” If this is the case, then a game can be classified as gambling.

DFS Currently in Legal Danger

So, how exactly does this affect the fact that DFS operates within New York? Well, for the immediate future, it doesn’t really mean anything because of the confusing nature of the New York judicial system. You see, despite the fact that this decision was rendered by the New York Supreme Court's Appellate Division, this body is not the highest tribunal in the state as opposed to similarly named courts in other states, which do tend to be the highest courts in their jurisdictions.

Rather, New York's highest court is called the Court of Appeals. Therefore, there's every possibility that this verdict will be appealed and the case heard before the Court of Appeals before a final decision is rendered.

DFS is expected to continue to operate, for now, in the same way as it has been doing since the 2016 law was introduced. Of course, that doesn’t mean that things will remain the same way indefinitely. So, DraftKings (which recently became the official DFS partner of the NFL) and FanDuel will remain in the state for the foreseeable future and will continue providing their exciting fantasy sports options to players.

Following the ruling by Justice Mulvey, both of these brands came out with brief statements as was the case when the 2018 ruling was announced. FanDuel said that it expects an appeal to take place and that it will continue to offer contests via its site to N.Y. players while that appeal is decided. Meanwhile, DraftKings said that it believes the legislative action authorizing fantasy sports in the state was constitutional and also in the best interests of both taxpayers and fans of fantasy sports gaming.

While it’s true that daily fantasy sports may be in jeopardy within New York, both of those brands also have deals within The Empire State to be able to legally provide sports betting. They run retail sportsbooks for a couple of casinos in upstate New York, so it isn't game over for them even if DFS eventually winds up forbidden.

Online Poker Prospects Lowered?

Paper With Question Mark

Sen. Joseph Addabbo (D) may be looking to try and push an online poker bill through once more; yet, this isn't something that has had much traction in the previous six years. New Yorkers have been left quite unoptimistic about the introduction of legal online poker because of that.

And with the ruling against DFS, things aren’t looking so positive for poker once more. Why? Because lawmakers are trying to make use of exactly the same method for online poker to become a legal entity as they did for daily fantasy sports.

Rather than putting the question to the voters via ballot box, Addabbo and companions like Assembleyman Gary Pretlow (D) have been trying to simply amend current laws so that they incorporate online poker into their definitions alongside. This way, it wouldn’t necessarily need to be voted on by the electorate as a whole. Yet, there’s the likelihood now that any attempts at doing this would result in failure because the resulting law would be unconstitutional.

Gary PretlowAssemblyman Gary Pretlow Has Been at the Forefront of Online Gaming Legalization

Of course, anyone who has played poker, and indeed DFS, knows that these games require much more than luck to be successful. There is also a certain amount of skill that is necessary to be able to not only participate in such games but to be in with a greater chance of winning. This firmly plants them both in an area of skill. Granted, luck may play a part in both endeavors, but supporters of these games contend that skill predominates.

Accessing Online Poker and DFS at the Moment in NY

Computer

As things stand at the moment, New York has provided five different DFS sites with temporary licenses, which allow them to legally operate within the state. Alongside the aforementioned DraftKings and FanDuel platforms, The Empire State also allows access to Yahoo, FantasyDraft and Draft for now. Granted, all five companies are likely to proceed with an appeal, with the backing of New York Attorney General (AG) Letitia James, in a bid to take the case to the next level.

With regard to online poker, New York doesn’t have any legislation in place that regulates it. Yet, there are still various legal offshore platforms that provide New Yorkers with the ability to engage in their favorite poker games. We have a guide to the best online poker sites available to New York residents, which provides an insight into the ability to play poker from within this great state.

If you don't reside in New York, then there are plenty of operators to choose from, and most other states in fact have a greater number of rooms open to them. For more info about this, consult our well-researched online poker guide for Americans.