A New York court has affirmed the constitutionality of Daily Fantasy Sports in New York by a 4-3 margin. As a result, apps like FanDuel and DraftKings can continue to offer Daily Fantasy Sports in the state.
A 2016 lawsuit navigated its way to the New York State of Appeals in White v. Cuomo, in which a majority ruled that DFS is, as the state argued, a “lawful skill-based competitions for prizes under our precedent.” Legal challenges took root immediately after New York legalized fantasy sports in 2016.
The state’s success in the Court of Appeals can be traced to the care that New York state lawmakers took when they wrote the 2016 law to specifically exclude DFS from the definition of gambling in the state penal code. As a result, it survives the constitutional challenge brought forth by four plaintiffs regarding Interactive Fantasy Sports (IFS) competitions.
“Evidence presented to the legislature indicated that outcomes in (Interactive Fantasy Sports) contests are predominantly based on skill,” wrote Chief Judge Janet DiFiore for the majority. “Studies showed that skilled players achieve significantly more success in IFS contests and that rosters of skilled human players were more successful in IFS contests than randomly generated lineups over 80% of the time.”
Appeal Negates Previous New York DFS Ruling
In 2020, a lower New York court ruled that the DFS law did violate a prohibition on gambling, but the appeal now strikes that down. Proponents of the DFS law were preparing a constitutional amendment if they had failed in the New York State of Appeals. Daily Fantasy Sports would have been placed on pause if that had happened.
Several other states, including Florida and Louisiana, have also survived constitutional challenges to their Daily Fantasy Sports laws. Across the U.S., most states treat DFS as a gaming activity that is covered under state laws or federal laws on the subject. In New York, gambling is subject to federal regulation under the Indian Gaming Regulatory Act. which prompted the plaintiffs in this long-standing case to challenge it based on state law.
Since the lawsuit was initiated, much has changed in the New York sports betting market. In January, the state launched online sports betting, with both DraftKings and FanDuel operating sportsbooks in New York. The companies ranked 1-2 in total sports betting handle for February in New York, with FanDuel in the top spot at $568.1 million, and DraftKings second on the basis of $387.6 million in wagers accepted in the first full month of legal online sports betting in the Empire State.
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