New York High Court Rules Fantasy Sports Not Illegal Gambling, as Skill Tromps Chance

Posted on: March 22, 2022, 10:46h. 

Last updated on: March 22, 2022, 01:20h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

It’s finally case closed for New York’s years-long legal quarrel surrounding fantasy sports. The verdict came down in favor of the gaming industry.

New York daily fantasy sports DFS legal
Advocates of legal daily fantasy sports protest in 2015 outside then-New York Attorney General Eric Schneiderman’s office after he ordered sites like DraftKings and FanDuel to cease and desist their operations. Seven years later, the New York Court of Appeals has determined that DFS is not unconstitutional and does not constitute illegal gambling. (Image: AP)

This week, New York’s Court of Appeals — the highest court in the state — ruled 4-3 in favor of fantasy sports. The final legal opinion concluded that players competing in DFS contests are not engaging in illegal gambling, but games of skill.

New York state officials have been deliberating the legality of fantasy sports — specifically daily fantasy sports (DFS) played over the internet — since 2015. Then-New York Attorney General Eric Schneiderman wrote a cease-and-desist letter that year ordering DFS giants FanDuel and DraftKings to shut down their online operations in the state.

New York legalized DFS in 2016, but opponents challenged that law. The legal dilemma has been tied up in courts since, though DFS games were permitted to operate throughout.

Not By Chance

The majority of the Court of Appeals judges concluded that skill — not chance — is the prevailing factor in determining which player in a DFS contest ultimately wins. The appellate judges ruled that there’s considerable skill in assembling a winning DFS roster, and that overrides any elements of chance involved.

The prohibition on gambling … encompasses either the staking of value on a game in which the element of chance predominates over the element of skill or the risking of value through bets or wagers on contests of skill where the pool of wagered value is awarded upon some future event outside the wagerer’s influence or control. However, games in which skill predominates over chance and skill-based competitions for predetermined prizes in which the participants have influence over the outcome do not constitute ‘gambling,'” Chief Judge Janet DiFiore wrote in the majority.

The DFS legal challenge was largely bankrolled by “Stop Predatory Gambling,” a national nonprofit that seeks to limit commercial gambling.

Writing the dissenting opinion, Judge Rowan Wilson said the New York Constitution explicitly prohibits fantasy sports because, he argues, DFS is nothing more than sports betting.

“Everyone knows that sports betting is gambling. Betting on how many touchdowns a particular player will score is gambling,” Wilson wrote. The lead dissenter added that any activity that involves an element of gambling is gambling, and therefore can only be legalized through a constitutional amendment approved by voters.

Sports Betting Unimpacted

New York legalized sports betting in 2013 through its expanded gaming package that additionally authorized four upstate brick-and-mortar commercial casinos. But the sports betting component was placed on hold, as sports betting remained federally outlawed at the time.

That changed in May of 2018 when the US Supreme Court struck down the federal ban that had limited such gambling everywhere other than Nevada. The decision reached this week by the New York Court of Appeals dealt only with fantasy sports — not sports betting.

FanDuel, one of the nation’s largest DFS operators that morphed into a leading sportsbook firm since the landmark SCOTUS 2018 decision, calls New York home. The gaming company celebrated the New York DFS ruling.

“New York state is FanDuel’s home, and our New York customers have enjoyed playing daily fantasy for years. We are pleased that New Yorkers will continue to have access to fantasy sports contests,” said FanDuel spokesperson Kevin Hennessy.