New York Court of Appeals Rules in Favor of Daily Fantasy Sports

On Tuesday, the New York State Court of Appeals ruled that daily fantasy sports are games of skill rather than chance, making them legal under New York state law. The Court of Appeals voted 4-3 to uphold the 2016 law classifying DFS as skill, which allows it to pass the test in New York to make it a legal activity. Daniel Wallach, founder of Wallach Legal LLC, a law firm focused on sports betting, called this “the end of the road of the debate against the legality of DFS in New York.”

History of Daily Fantasy Sports in New York

New York state officials have been debating the legality of daily fantasy sports (DFS) for several years. In 2015, then-New York Attorney General Eric Schneiderman wrote a cease-and-desist letter that ordered DFS operators FanDuel and DraftKings to shut down their operations in the state. In 2016, New York legalized DFS, but it has since been tied up in courts. DFS operators were permitted to continue operations during the legal proceedings, but the final legal verdict has now been cast.

Skill Trumps Luck in DFS

New York has a constitutional prohibition on gambling surrounding the illegality of luck-based gaming, but the Court of Appeals found that DFS did not fall under this category. In the majority ruling, Chief Judge Janet DiFiore stated that studies showed over 80% of the time, skilled players achieve more success in DFS than randomly generated lineups. DiFiore also said that “skill-based competitions for predetermined prizes in which the participants have influence over the outcome do not constitute ‘gambling.’”

In the dissenting opinion, Judge Rowan Wilson called the Court of Appeals ruling an amendment of the state constitution and described that DFS involves an element of gambling, so it should be viewed as any other form of gambling. Wilson called the ruling an “affront to the importance of our Constitution and the role of the courts – in particular this Court – in upholding the Constitution and defending it from ordinary legislative incursion.”

The lawsuit challenging the constitutionality of DFS in New York was organized by the group Stop Predatory Gambling, a national nonprofit organization that works against commercial gambling. An attorney for the group, Neil Murray, expressed his disappointment that the court did not apply the “ordinary, commonsense definition of gambling” in its majority decision.

Sports Betting Surge Remains Unaffected

While the constitutional limitations on luck-based gambling remain in place, New York has been able to circumvent the prohibition as sports betting is controlled by tribal casinos subject to federal regulation under the Indian Gaming Regulatory Act, not state regulation. In 2021, lawmakers expanded New York’s sports betting industry to include online play by allowing tribes to hold licenses with sportsbooks on their federally regulated land.

FanDuel and DraftKings have been two of the most prominent leaders in the early returns on the New York sports betting market, and both platforms are expected to continue to be leaders in DFS. FanDuel, one of the largest operators in both sports betting and DFS, called New York its home. FanDuel spokesperson Kevin Hennessy said the company is “pleased that New Yorkers will continue to have access to fantasy sports contests.”