New York has decided to stop regulating the daily fantasy sports (DFS) industry in the wake of a recent ruling declaring DFS sports contests to be illegal in the state. The decision leaves more than a dozen daily fantasy sports firms operating in an unregulated environment.
Ruling: Sports Contests Are Illegal
Last month, acting Supreme Court Justice Gerald W. Connolly ruled in favor of a lawsuit’s anti-gambling plaintiffs, saying daily fantasy sports contests violate state’s gambling laws. The ruling meant that contests offered by DFS operators such as FanDuel and DraftKings should be terminated by the state.
Justice Connolly made an interesting judgment when he ruled that DFS has significant elements of chance and that no skill or judgment of the participant can change future athletic performances. However, the judge maintained that DFS contests are predominated by skill rather than chance.
The judge cited previous opinions from the Attorney General’s Office stating that sports betting was included in the constitution’s ban on bookmaking and pool-selling.
Gambling Commission Stops Regulatory Authority
In the wake of the ruling, the state’s Gambling Commission has removed its regulatory authority over the DFS industry and eliminated any reference to daily fantasy sports on its website. All financial information in relation to the industry, temporary regulations, as well as a list of licensed daily fantasy sports firms were removed from the website.
Brad Malone, Gaming Commission Spokesman, said the agency cannot continue regulating the industry following the recent ruling, and that it needed to make necessary changes to its website.
In a regulatory-free environment, daily fantasy sports companies can modify their contest offerings and change player rules as they like, though no such changes have been reported as of now. The betting scene is currently very busy as three pro sports leagues’ are underway and has New York punters placing wagers on a consistent basis.
State Will Appeal — But Not Until December
In 2016, the state’s Legislature decided to exclude daily fantasy sports contests from the illegal gambling category, paving the way for several firms to offer sports wagering to New Yorkers.
The Cuomo administration will likely appeal the recent ruling, though it might have to wait until December for it to happen. Until that period, daily fantasy sports firms will continue to operate as the state strips itself of the authority to impose special taxes on the industry.
The likely effect of an appeal would be to restart the state’s regulatory role, as the appeals process takes its time. But lawyers say the Cuomo government could bypass the midlevel appeals court, which would result in the case being taken directly to the Court of Appeals.
Cornelius Murray who represented the anti-gambling group that filed the lawsuit plans to take the case back to the lower court to try to seek a modification so that the contests would be considered not only illegal but also a violation of criminal laws.
This is due to the fact that while the judge ruled daily fantasy sports contests are illegal, he upheld the 2016 law which removed any criminal penalties against daily fantasy sports firms.
Murray said they are left in a really vague situation, and things are quite difficult to describe in New York but he believes everything will be made clear in the coming weeks.
NY Considers Broader Sports Gambling
The debate on the legality of daily fantasy sports comes as the Cuomo government debates on whether to legalize expand sports betting. Sports betting is already in full swing in several states, following a US Supreme Court ruling which repealed the federal ban on wagering on both college and professional sports contests.
According to industry insiders, Andrew Cuomo is looking at the prospect of approving a broader sports gambling amendments in his 2019 state budget. But it remains to be seen whether this would require a change in the constitution, which would take a long time to complete.
FanDuel said the recent ruling makes clear that the 2016 decision by the legislature cannot be challenged in court. In a statement released on Monday, the operator said it will continue to offer fantasy sports to its New York customers. The DFS operator also said it will cooperate with moves to permanently restore the state’s regulatory powers as it believes in the benefits of a regulated industry.