NY DFS Is Constitutional After All, Appeals Court Confirms

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It is constitutional for NY residents to enter and participate in paid DFS contests, the state’s Court of Appeals ruled Tuesday.

The determination comes after years of uncertainty led to a hearing in October. The New York legislature legalized daily fantasy sports in 2016 by calling it a game of skill.

That led to two arguments from opponents which eventually swayed the state Supreme Court in their favor in 2020, setting the stage for this week:

What court said about NY DFS

Calling DFS in NY constitutional was not a unanimous decision. In fact, it came down to a 4-3 vote.

Chief Judge Janet DiFiore penned the opinion that stated opponents did not do enough to prove their point:

Today, we clarify that the historic prohibition on “gambling” in article I, § 9 does not encompass skill-based competitions in which participants who exercise substantial influence over the outcome of the contest are awarded predetermined fixed prizes by a neutral operator. Because ample support exists for the legislature’s determination that the IFS contests authorized in article 14 are properly characterized as lawful skill-based competitions for prizes under our precedent, plaintiffs have not met their burden to demonstrate beyond a reasonable doubt that article 14 is unconstitutional.

DiFiore cited past examples that show the burden is on the plaintiff to prove any legislative enactment is unconstitutional.

There is chance – just not enough

The court did not discount the plaintiff’s argument of chance as a part of DFS. It just is not a big enough factor to throw the whole industry out of New York, DiFiore wrote:

Nevertheless, as the record demonstrates, the legislature’s determination that IFS contests are predominantly games of skill because they pit the strategic rosters of participants against one another—that is participants have control over their own skill-based roster selection, which substantially determines the outcome of the IFS contest—is firmly grounded in evidence and logic. In fact, plaintiffs have offered no proof to the contrary, relying merely on the existence of the Attorney General’s prior allegations against certain IFS operators and a New York Times crossword puzzle characterizing IFS as involving “bets” as their evidence that IFS contests constitute “gambling.”

The skill of the player is noted again later:

The outcome of an IFS contest turns—not on the performance of real-life athletes, as it would with respect to a bet or wager—but on whether the participant has skillfully composed and managed a virtual roster so as to garner more fantasy points than rosters composed by other participants.

DiFiore also noted that not every contest that includes a monetary stake is considered gambling.

Mobile NY betting drawing plenty of attention

Keeping DFS legal in New York is certainly a positive for both players and the industry as a whole. Whether the biggest players like DraftKings and FanDuel care like they once did at this point is another story.

Mobile sports betting in New York nearly passed $4 billion in handle in 10 weeks. The market already set national records for handle, revenue and tax revenue. Operators have already paid more than $105 million in taxes in less than two months.