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Last Thursday, a New York appeals court threw a monkey wrench in the daily fantasy sports industry in the state by ruling that the games are unconstitutional and remarking that the contests are games of chance.
The law that legalized daily fantasy sports in New York was signed by Governor Andrew Cuomo in August of 2016. The fine print of the bill declared that daily fantasy sports were not gambling and the final law provided protections and standards for customers.
Two months later, the law found itself challenged by a group of residents claiming that the daily fantasy law was causing undue harm to them and their family members. One woman that helped file the lawsuit claimed that her father routinely played at off-track betting parlors and that the resulting debt caused her mother to be harassed by bill collectors as a result.
Lawyers for the group argued that the Cuomo-endorsed law circumvented the state’s constitution, making a gambling expansion illegal unless the voters of New York approved the measure and made it a new constitutional amendment.
Like sports betting, the group contended, daily fantasy sports were bound to the constitution because they are games of chance more than skill.
The lawsuit began to sprout wings in 2018 when a judge in the Albany County Supreme Court agreed with sections of the group’s lawsuit that said daily fantasy sports violated the state’s constitution. But the judge also ruled the legislature did not violate the law by exempting the contests from the penal code of New York.
But the appeals court found differently than the Albany Court by putting together a much more direct ruling that stated that daily fantasy does require skill but there is a large element of chance involved, such as a player getting injured or the game being affected by inclement weather.
The group’s lawyer, Cornelius D. Murray, told the media that his clients were happy with the court’s ruling. “As of today,” he said, “the legislation purporting to legalize daily fantasy sports is unconstitutional, so the penal law prohibiting it remains on the books.”
Even with the victory at the lower appellate court, all parties, including the daily fantasy companies, admit that the final decision will be made by the state’s Supreme Court. Until that final decision is made by the highest court in New York, players will continue to be able to play the contests regularly held by companies such as DraftKings and FanDuel.
In a statement, FanDuel said, “We expect that there will be an appeal and we’ll be able to continue to offer contests while that appeal is decided.”
Although both daily fantasy companies are confident that they’ll find a path to continue to offer their services to their customers in the state of New York regardless of a final ruling, representatives believe the road is a bit rockier after the appellate court’s decision.
DraftKings and FanDuel are available in 43 states around the United States and together their companies accounted for just under $400 million in revenue with their games and contests.
If daily fantasy is outlawed in New York, the companies will lose one of the three biggest markets alongside Texas and California.
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