New York Court Green-Lights DFS Contests in New Ruling

  • NY State Court of Appeals ruled that DFS contests are constitutional, as they are games of skill
  • DFS operators have not been investing in expansion efforts in NY due to the legal uncertainty
  • The origins of the dispute date all of the way back to 2015
  • Similar constitutional challenges to DFS contests were unsuccessful in Florida and Louisiana
judge's gavel
A Court of Appeals in New York has ruled that daily fantasy sports contests are constitutional. [Image: Shutterstock.com]

The final say on the matter

The New York State Court of Appeals has ruled that daily fantasy sports (DFS) are, in fact, constitutional. The ruling on Tuesday comes after many years of litigation and overturns two previous lower court rulings. It represents the final decision on the matter.

categorizing DFS contests as games of skill

Judges voted 4-3 in favor of categorizing DFS contests as games of skill, rather than games of chance. As a result of the ruling, DFS contests do not fall under the state’s prohibition on games of chance. As DFS operators were able to hold contests during the course of the appeals process, not much is set to change to their operations.

A landmark day

When announcing the final decision of the court, Chief Judge Janet DiFiore referred to studies that show how “skilled players achieve significantly more success in IFS contests.” She also noted that rosters made by skilled people were more successful 80% of the time in these competitions than lineups that were generated randomly. In his dissenting opinion, Judge Rowan Wilson claimed that the state’s constitution prohibits DFS contests as he says these contests are akin to sports betting, which is a form of gambling.

The main bankroller of the DFS legal challenge in New York was a nationwide non-profit called “Stop Predatory Gambling.” It aims to limit forms of commercial gambling.

Senator Joseph Addabbo, who chairs the State Senate Gaming Committee, welcomed the news of the ruling. He believes that the operators of DFS contests will see bigger revenues as they can now invest in expansion efforts without worrying that they could be shut down. Addabbo noted how a lot of New Yorkers have seen a huge amount of ads for online sportsbooks, but little to no ads for fantasy sports due to the uncertainty regarding the legal standing of these contests.

A long-running dispute

The origins of the DFS dispute date back to 2015 when then-New York Attorney General Eric Schneiderman penned a cease-and-desist letter, ordering DFS operators DraftKings and FanDuel to close their online operations.

similar legal challenges to DFS have also been defeated

Following attempts by the state to legalize and regulate the DFS market in 2016, legal challenges followed. Two decisions deemed DFS contests to be unconstitutional in New York. Similar legal challenges to DFS contests have also been defeated recently in Florida and Louisiana.

DFS operators like FanDuel and DraftKings have managed to continually thrive despite DFS disputes. Both are now two of the biggest sports betting operators in the country. Sports betting has been a massive success since the New York online market launched in January. There are now lawmakers who are attempting to push through the legalization of online casinos on the back of the success.