FanDuel, DraftKings Can Remain Open In New York After Court Grants Stay Of Injunction

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DFS sites get stay New York

DraftKings and FanDuel won a court ruling allowing them to continue serving New York customers, for now, according to various media reports.

The DFS ruling in New York

The top daily fantasy sports operators scored a victory in their ongoing legal battle in New York, as an appellate court turned a temporary stay of a preliminary injunction against DraftKings and FanDuel into a stay that will remain pending the result of a court case.

The more-permanent stay — allowing DraftKings and FanDuel to operate under the status quo — was first reported by ESPN’s Darren Rovell via Twitter, and was quickly confirmed by DraftKings and other media sources on social media.

The stay was granted by a panel of four judges from the Appellate Division of the New York State Supreme Court.

A temporary stay of a preliminary injunction against DraftKings and FanDuel was granted on December 11. That stay came the same day that New York Supreme Court Justice Manuel Mendez granted the New York attorney general’s request for an injunction stopping FanDuel and DraftKings from taking customers in the state.

According to initial reports, the stay appears to be based on possible irreparable harm to DraftKings and FanDuel that an injunction would create, if it had to stop serving the New York market.

So far, there is not any sense of the court’s leanings on the merits of the case, as indicated by the ruling:

ESPN reported that the full decision would be available next week.

What’s next for DFS in New York

The next step appears to be be a hearing in front of the state Supreme Court about the merits of the case, at a date to be determined. Per the aforementioned ESPN report, that case will be heard in the spring.

At the same time, the New York legislature is preparing to attempt to create a more permanent solution for DFS in the state that could render the issue of the legality of DFS moot. (The NY AG’s office is also seeking restitution of funds for customers from DraftKings and FanDuel, now, however.) Several bills have been introduced that would expressly legalize DFS in the state; an informational hearing on DFS was held last month.

The stay gives DraftKings and FanDuel some legal and financial certainty, at least in the short term, as they can continue to take entry fees from users in what is the most important state in terms of users and revenue to the DFS industry.

Reaction to the ruling

DraftKings offered the following statement following the news of the stay, from counsel David Boies:

“We are pleased with the Court’s ruling today.  Daily Fantasy Sports contests are as legal now as they have been for the past seven years that New Yorkers have been playing them.  As our litigation continues, we expect an appellate court to see what we have known since the outset: DFS is a game of knowledge and skill, one that builds community and whose competitive spirit has become important to the lives of millions of people. Our ongoing appeal will make clear that daily fantasy contests require just as much skill as season-long contests, which the Attorney General recognizes as perfectly legal under state law.

“We are engaged with legislatures and Attorneys General across the country, including in New York, to ensure that our fans are able to experience our contests in a fun and fair way with appropriate and thoughtful consumer protections in place.  This includes active collaboration with the Attorney General in Massachusetts, where we are working to become the industry leader in transparency and consumer protection. We will continue in these efforts so that fans can keep enjoying Daily Fantasy Sports for years to come.”

Damien LaVera, Attorney General Eric Schneiderman’s communications director, offered this statement:

“Having already obtained a preliminary injunction against these companies, we look forward to demonstrating to the appellate division that the trial judge was correct. DraftKings and FanDuel are indeed operating illegal gambling operations in New York and should be permanently barred from doing business in New York.”

Correction: An earlier version of this story incorrectly stated the appellate ruling came from a panel of five judges.