WSOP
Legal Sports Report

New York Daily Fantasy Sports

Daily fantasy sports is now legal — and regulated — in New York.

On Aug. 3, 2016, the state enacted a law that allows DFS sites to serve New Yorkers once again.

During much of the turmoil the daily fantasy sports industry experienced in late 2015 and into 2016, New York has been the epicenter.

The legal issues experienced by the likes of FanDuel and DraftKings pretty much started with Attorney General Eric Schneiderman issuing cease-and-desist orders in November, and they have expanded across the country.

New York is one of the largest markets for paid-entry DFS, so the return of NY for DFS sites is a big deal ahead of NFL season.

Temporary permits were issued to DraftKings, FanDuel and a few other sites on Aug. 22; those sites are now in operation in NY.

Recent DFS New York Stories

What’s going on now with DFS in New York?

Daily fantasy sports is coming back to New York.

The Senate passed legislation in the early morning hours on June 18, just before it adjourned for the year. An aggressive lobbying effort by the industry for the bill — and by the state’s racinos against it — had put the bill’s future in doubt in the Senate up until it was called to the floor.

After a month and a half, Gov. Andrew Cuomo finally signed the bill in August. With that action, sites could begin to apply for temporary permits to operate while the full licensing process gets under way.

Before the last-minute drama in the legislature, DraftKings, FanDuel, and most other DFS operators pulled out of the state when those two sites signed a settlement in March. That was done with the intent of the sites finding a legislative solution to becoming legal. That effort was slow going at the start, but things picked up in June.

A bill was introduced by Sen. John Bonacic in February, but it saw no action for months. That had been in deference to a newly crafted bill from Rep. Gary Pretlow that surfaced in May.

Background of DFS in New York

How did we get to this point for DFS in New York?

It all started with Schneiderman. Back in October, he noted to the media that he was investigating DraftKings and FanDuel, and saying things like they are “totally unregulated gambling venues.”

The was followed by the now famous cease and desist orders to DraftKings and FanDuel in November, which likely set off a number of other attorney generals to look into DFS.

That set off a court battle. An emergency hearing was held to consider injunctions from the AG against FanDuel and DraftKings the same month.

A Supreme Court judge found on the side of the NY AG on Dec. 11, but an appeals court put a stay on the preliminary injunction, reinstating the status quo, before DK and FD exited the state in March.

Key documents for DFS in NY

Frequently asked questions about DFS in New York

Can you play fantasy sports in New York?

DraftKings, FanDuel, Yahoo, FantasyDraft and Draft have all received temporary permits and are now operational in New York.

Several other sites have applied for temporary permits.

All of those sites are in the process of receiving their full licenses.

What happens after New York enacted the DFS law?

All lawsuits between the NYAG and DraftKings and FanDuel will be dropped, except for the former’s false advertising claims.

Any site that wishes to serve the New York market must be licensed by the state gaming commission.

What does the DFS regulation law do?

Here’s what the enacted law does:

  • The bill gives regulatory control to the NY State Gaming Commission.
  • Licensed operators must pay a tan on gross revenue of 15 percent, as well as another 0.5 percent tax with a cap of $50,000.
  • minimum age of 18 is established for players.
  • DFS may not involve any contests involving collegiate sporting events or horse races.
  • DFS is exempted from the part of the NY penal code dealing with gambling.
  • A number of consumer protections are put in place.

How important is the NY DFS market?

If forced to stay out of NY indefinitely, it is a major setback in terms of revenue and liquidity for both FanDuel and DraftKings. New York is believed to be the second largest state in terms of both revenue and users for the two sites.

Fortunately, the settlement came at one of the slowest times of year for the sites, and offers at least a possibility that they could be operational again in time for NFL season, with a legislative solution or a positive court ruling.

What does all this mean for the pro sports leagues?

Three major professional sports leagues — the NBA, the NHL and Major League Baseball — have equity in either DraftKings or FanDuel, and also have their headquarters in New York.

The fact that DFS is now legal in New York allows the leagues to breathe a sigh of relief.