New York’s Highest Court Legalizes Daily Fantasy Sports

New York’s highest court has finally ruled that Daily fantasy sports are games of skill and thus legal under state law. The state had legalized DFS in 2016 by calling it a game of skill but the legislation had been challenged in the court immediately.

Now the DFS case is finally closed after the New York State Court of Appeals Tuesday reversed two lower court decisions that found DFS were games of chance. The verdict comes after years of speculation leading to a hearing in October.

NY residents can now participate legally in DFS contests.

Daniel Wallach, the founder of a law firm, said that the verdict is the end of the debate against the legality of DFS in the Empire State. The US Supreme Court is not likely to take up the state DFS case.

Details of the Verdict

On Tuesday, New York’s Court of Appeals ruled 4-3, concluding that skill, not chance, is the dominant element in determining which player in a DFS contest ultimately wins. In other words, the majority of the court was convinced that players competing in DFS contests are not engaging in illegal gambling.

The appellate judges observed that there’s sufficient skill involved in assembling a winning DFS roster, at least enough to override any elements of chance.

In her opinion, Chief Judge Janet DiFiore wrote that opponents of DFS did not do enough to prove their case. DiFiore cited previous examples, noting that the burden is on the complainant to prove any legislative enactment is unconstitutional.

DiFiore, who wrote in the majority, concluded that the prohibition on gambling… “encompasses either the staking of value on a game in which the element of chance predominates over the skill… However, games in which skill predominates over chance and skill-based competitions for pre-determined prizes in which the participants have influence over the outcome do not constitute ‘gambling.”

Judge Rowan Wilson, who wrote the dissenting opinion, said the state Constitution explicitly bans DFS because, according to him, DFS is nothing more than sports betting.

As of right now, it’s uncertain how this decision will impact the future of legal online gambling in New York. But it’s a start.

How Did Court Find DFS is Skill-based?

The final court ruled 4-3 to uphold a 2016 law that stated DFS is a game of skill. The court did so by using a test that weighs which factor – skill or chance – dominates when playing an “Interactive Fantasy Sports” game.

DiFiore found that IFS contests are predominantly based on skill, citing studies that show skilled players achieve potentially more success in IFS contests and that rosters of skilled individual players were more successful in IFS contests than randomly generated lineups over 80% of the time.

The court’s decision centered on a Penal Law and viewed whether an outcome relies on a “material degree upon an element of chance”.

According to Wallach, the court applied the predominate test instead of the materiality test, which “made all the difference in the world. It was outcome determinative.”

How Have We Reached Here?

The New York lawmakers have been working on the legality of DFS since 2015. The same year, the then-Attorney General Eric Schneiderman ordered DFS operators FanDuel and DraftKings to cease their mobile operations in the state.

Fantasy sports were finally signed into law by then-Gov Andre Cuomo in 2016, allowing the DFS giants DraftKings and FanDuel to operate legally. But the law was challenged in court.

However, the legality of Fantasy Sports has been in question in New York since DFS games were allowed to operate throughout.

Tuesday’s ruling is in line with the verdicts in other states, which have mostly settled their DFS-related issues. So far, 25 states have legalized paid DFS contests as games of skill.

The New York State Court of Appeals is likely to be settled once and for all as the US Supreme Court is not expected to take up a state DFS case.