DraftKings and FanDuel operate in uncertain territory in NY as sports betting looms

Report: NY ‘No Longer Has A Role In Regulating’ Fantasy Sports After Court Ruling

NY no role in fantasy sports regulation copy

How about this for a plot twist for DraftKings and FanDuel: They are now operating without any sort of daily fantasy sports regulation in New York, the state that was the epicenter of their legal battles in recent years.

According to a report from The Buffalo News, the NY State Gaming Commission is not overseeing the DFS industry in the wake of a recent state court ruling that a 2016 fantasy sports law was in violation of the states constitution.

Here’s the NYSGC according to reporter Tom Precious of the Buffalo News:

“Since the notice of entry was filed, the Commission no longer has a role in regulating DFS. That required a modification of the website,” said Gaming Commission spokesman Brad Maione.

Well, that escalated quickly for DraftKings and FanDuel

A few weeks ago, things started going poorly on the legal front for the DFS industry.

A New York Supreme Court judge ruled in October that the 2016 law legalizing and regulating paid-entry fantasy sports in the state was unconstitutional.

There has always been some question of whether the state legislature overstepped its bounds with the 2016 law that defined daily fantasy sports as a game of skill. But most thought it would be much longer before a situation like the one that arose on Monday would play out.

Indeed, as The Buffalo News reported, the NYSGC website used to include an entire section about fantasy sports. Those references had been removed as of Monday.

What’s that mean in NY?

Legal Sports Report reached out to both DraftKings and FanDuel late Monday night. Here is DraftKings’ response on Monday night:

 We understand that the State will be taking an appeal from the court’s decision, and DraftKings plans to continue to operate in New York while the courts and the State continue to sort this out.  … Any impact from the decision (if it ultimately stands) will be stayed while any appeals are pending.

The Buffalo News reported that FanDuel said it was business as usual for the company in New York. Players in New York could also enter contests at DraftKings as normal, according to anecdotal reports.

Speaking on behalf of the NYSGC, Maione provided a follow-up statement to LSR on Tuesday:

The Court ruled that the legislature’s attempt to regulate Daily Fantasy Sports was unconstitutional. Until an appeal is filed, Daily Fantasy Sports is outside of our jurisdiction. The Commission has no comment on the operations of Daily Fantasy Sports.

Where does that leave DraftKings and FanDuel in New York?

Is either company violating law in the state? The law regarding fantasy sports in the state is simply not in effect.

The state’s attorney general was the defendant in the case, as it’s responsible for defending New York’s laws.

It seems likely that the case will remain tied up in the appeals process — as the statements intimated — but the action by the gaming commission to disavow the DFS law was an unforeseen wrinkle.

In the absence of a valid law, the last time we heard from the state attorney general’s office, the AG said DFS was illegal under state law prior to 2016.

Here’s another twist, however: Eric Schneiderman, the AG at that time, is out of office, caught up in the “Me Too” movement. The current attorney general is Barbara Underwood, who holds the office until Letitia James — elected to office this month — assumes office in 2019.

The status of DFS seems to rest with the AG’s office, but before Monday’s report, requests for comment by LSR to the AG’s office on the court case’s impact were referred to the NYSGC and the office of Gov. Andrew Cuomo.

What about NY sports betting?

Here is the really interesting part for the two companies.

A FanDuel Sportsbook exists just across the NY border in New Jersey, and both FanDuel and DraftKings Sportsbook operate online sports betting in neighboring NJ.

Adding to the intrigue: Both companies have sports betting deals in place in New York. DraftKings has a deal in place with del Lago Resort & Casino for when the state rolls out legal sports gambling. FanDuel, meanwhile, is partnered with Tioga Downs.

It would be pretty interesting if the ultimate result is that both companies can legally offer sports wagering but not DFS in the state.

Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.