New York Judge Shuts Down DFS

In a season of difficulty, a New York judge in December dealt the cruelest blow to the daily fantasy sports industry, when he upheld a ruling by New York Attorney General Eric Schneiderman that the activity amounted to illegal sports betting and let the ban stand.

While Manhattan state Supreme Court Justice Manuel Mendez didn’t make a final declaration on that question, he indicated he wanted to let the courts decide the legality of the games before allowing them to resume. “The protection of the general public outweighs any potential loss of business,” wrote the judge in his opinion.

DraftKings—which had continued to operate in New York, while its rival, FanDuel, had not—immediately filed an appeal to Mendez’s ruling.

David Boies, a lawyer for DraftKings, contends that DFS is legal and that the judge should have maintained the status quo while legal arguments played out.

FanDuel affirmed that it was on the same page as DraftKings.

“We remain committed to ensuring all fantasy sports are available to New Yorkers, and will work to bring our product back to sports fans around the state through our appeal and working with the legislature to enact sensible regulations for fantasy sports,” New York-based FanDuel said in a statement. “Today’s preliminary decision was wrong, and we expect we will ultimately be successful.”

Nonetheless, the chairman of a state legislative committee with authority over gambling said at a legislative hearing that he expects the state will move to legalize and regulate daily fantasy sports, despite the ruling.

Assemblyman J. Gary Pretlow, who leads the Committee on Racing and Wagering, did say, however, that lawmakers were waiting for the ruling before proceeding.

Now that the judge has ruled, Pretlow said the legislature will move to legalize DFS.

“We’re not here to litigate the legality of fantasy sports,” he said. “That is in the courts right now, and regardless as to what the outcome of that case is, what we’re interested in is in regulations, licensure, consumer protection. Those are the issues we’re interested in for the state of New York.”

Both FanDuel and DraftKings have argued that most of their tournaments are won by a small group of highly skilled players, proving the games take skill to win. They also argue that players aren’t making a traditional bet, but instead entering a contest and competing for prizes.

Officials for the industry said again they are willing to work with states to ensure proper consumer protections are in place.