NY DFS Are Constitutional From Appeals Court

A ruling by the New York Court of Appeals in late March stated that it is constitutional for New York residents to enter and participate in Daily Fantasy Sport (DFS) contests. The decision was handed down after a back and forth and uncertainty of a ruling which ultimately led to a heading in October. The issue stemmed from the state of New York legislature legalizing daily fantasy sports in 2016 by giving it the classification as a “game of skill”. In 2018, the New York Supreme Court ruled that the state of New York had unlawfully expanded gambling in 2016 by calling DFS a game of skill. In 2020, this ruling was upheld by Acting Justice Gerald W. Connolly.

A Close Call

The future of Daily Fantasy Sports in New York looked to be in jeopardy until just recently as the courts ruled in a 4 to 3 vote that Daily Fantasy Sports were in fact constitutional. The main crux of the argument was that not only was gambling illegally expanded and required a constitutional amendment, it was also that Daily Fantasy Sports were based too heavily on chance and cannot be called a game of skill. 

Janet DiFiore, Chief Judge of the state of New York believes that opponents of the ruling did not provide enough evidence to prove their point. She stated that the clarification on prohibition on gambling did not involve skill based competitions where players who exercise a fair amount of influence on the outcome of the competition are given predetermined awards by a neutral operator. Since there is sufficient evidence for the determination of the legislature that the Daily Fantasy Sport competitions that are given in article 14 are defined as lawful, skill based contests for prizes under the state of New York’s precedent, the plaintiff did not show beyond a reasonable doubt that article 14 is unconstitutional. 

A Gray Area Ruling 

DiFiore gave historical examples of when proving that legislative passing is unconstitutional, the burden of proof is on the plaintiff. The court, while ruling that the plaintiff's main point of these contests to be considered a game of chance weren’t outlandish, it wasn’t enough of an argument to remove DFS from the state entirely. According to DiFiore’s statements, the skill of the player was mentioned several times in the ruling. 

The legislature determined that Daily Fantasy Sport contests are for the most part a game of skill because the participants go against each other with strategic rosters. The players in the DFS contest have control of their skill based selections of their roster which have a significant impact on the final outcome of the contest. These selections are made in logic and analysis. 

DiFiore ruled that the contests were determined by whether or not the player in the contest had taken their skill to compose and manage their roster so they can have more fantasy points than other rosters composed by other players. It’s based on the player’s skill and not on the performance of the real life athletes. It should also be mentioned that DiFiore says that not every contest is considered gambling if it involves a monetary stake.

Better Days For NY

The outcome of these proceedings were a large win for many different groups with a stake in online gambling. Not only for the operators of Daily Fantasy Sport contests like DraftKings and FanDuel but the citizens of New York who want to participate. This is a win for the state of New York as well. Mobile sports betting in New York is already beyond the $4 billion in handle in Quarter 1 of 2022. Operators in the state have already paid the state more than $110 million in taxes since going live. Currently DraftKings and FanDuel account for more than 90% of the market share for Daily Fantasy Sports.