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NY appeals court rules DFS contests unconstitutional


A New York State appeals court has struck down a law allowing for daily fantasy sports in the state, ruling the games to be illegal gambling.

The ruling came as part of a lawsuit from four plaintiffs – Jennifer White, Katherine West, Charlotte Wellins and Anne Remington, who said they had been harmed by gambling – against a law passed by the New York State Legislature in 2016.

The law stated that Interactive Fantasy Sports (IFS) such as those provided by FanDuel and DraftKings would not be considered gambling, which is currently illegal in New York outside of casinos, permitted state lotteries and charitable contests.

Although Justice Gerald W. Connolly of Albany County Supreme Court upheld that these games were indeed gambling, he ruled that the State of New York was within its powers to decriminalize the offering of these games in the state Penal Code. However, the plaintiffs appealed this ruling, sending the case to The Supreme Court Appellate Division’s Third Judicial Department.

The Supreme Court ruled that although the games do involve a degree of skill, the level of chance involved was significant enough to be considered gambling.

“Although participants in IFS contests may use their skill in selecting teams, they cannot control how the athletes on their IFS teams will perform in the real-world sporting events,” the court said.

“For example, those performances could be affected by such disparate circumstances as, among other things, player injury or illness, unexpected weather conditions, poor officiating, a selected player having a particularly bad day or an unselected player having a surprisingly good day.

“In other words, the skill level of an IFS contestant cannot eliminate or outweigh the material role of chance in IFS contests.”

The court then went a step further, ruling that the state did not have the authority to remove IFS contests from the New York Penal Code.

Citing a 1998 case on capital punishment, the court ruled that it could not strike down one portion of the law while leaving another section intact, particularly as this would leave IFS contests legal but unregulated.

“As part of the same legislation that decriminalized IFS, the Legislature clearly intended that IFS contests be heavily regulated,” the court said. “Hence, we conclude that the Legislature, if it had envisioned the possibility that courts would invalidate the majority of article 14 [the law in question], would not have wished to preserve the decriminalization of IFS.”

In a dissenting opinion, Justice Stan L Pritzker said that the law should stand, citing the high burden of proof required to overrule a legislative enactment. Pritzker argued that the “line-drawing within gray areas” to determine whether IFS involved more chance or skill did not pass this bar.

The State of New York is expected to appeal in the state’s highest court, the Court of Appeals. Players may still play Daily Fantasy Sports games in New York until the Court of Appeals makes a final ruling.

State Senator Joseph Addabbo, a longtime supporter of legal online sports betting in New York, said he was confident that the contests would be permitted after a ruling from the Court of Appeals.

“While the ruling from the New York Appellate Division, Third Department, was unfortunate, the legislature clearly considered fantasy sports to be a game of skill when it passed the law, and I expect the Court of Appeals to reverse the decision,” Addabbo said. “While I believe this decision to be a temporary setback for fans of daily fantasy sports and companies like FanDuel and DraftKings, it has no bearing whatsoever on the legality of advancing mobile sports betting in the state of New York, and I will continue to push for New Yorkers to have a safe, legal, and convenient way to bet on sports in their own state.”