ALBANY – The future of daily fantasy sports game in New York — including those run by companies like DraftKings and FanDuel — is in doubt after a judge ruled they violate the state constitution.
Acting Supreme Court Justice Gerald Connolly ruled late Friday in favor of anti-gambling organizations that had challenged the state's 2016 law allowing daily fantasy sports, deciding the games directly violate the gambling ban in the state constitution.
Attorneys involved in the case received the ruling Monday.
Future uncertain
The immediate impact of the ruling wasn't clear; a spokesman for Gov. Andrew Cuomo said it was still under review Monday evening.
Connolly's ruling was something of a split decision: While he declared the games unconstitutional, he also ruled state lawmakers were within their rights to take daily fantasy sports out of the state penal law, which penalizes illegal gambling.
Neil Murray, an Albany-based attorney who represented the plaintiffs in the case, said he believes the ruling means DraftKings and FanDuel will have to shut down their games in New York, at least until the state appeals.
If the state appeals, it's likely to receive a stay, which would allow the companies to continue to offer their contests in New York while the court proceedings go ahead.
"What the judge said is that the law that the Legislature passed purporting to legalize daily fantasy sports was unconstitutional and that daily fantasy sports is definitely gambling," said Murray, who filed the lawsuit with help from Stop Predatory Gambling, a national anti-gambling group.
There was no immediate comment from the state Gaming Commission, which regulates daily fantasy sports and was a defendant in the case.
As of early Monday evening, both FanDuel and DraftKings were still accepting entries from New York-based users.
A spokesman for the state Gaming Commission, which regulates daily fantasy sports in New York, said the agency was also reviewing the decision.
David Boies, the high-profile attorney representing DraftKings, issued a statement interpreting the ruling in the company's favor, claiming it will allow DraftKings to "continue to offer their services to players."
"We are continuing to study the court’s decision invalidating the regulatory structure and are committed to working with the legislature," Boies said.
A spokesman for FanDuel declined comment.
Previous battles
Daily fantasy sports allow users to compete for prizes by assembling a roster of athletes in professional sporting events and rewarding those rosters that perform well in a given day or week. In most cases, users pay a fee to participate in the contest.
In 2016, FanDuel and DraftKings — the giants of the daily fantasy sports industry — agreed to suspend their operations in New York as part of a settlement with then-Attorney General Eric Schneiderman, who had sued the companies and accused them of flouting the state's anti-gambling laws.
Later in the year, Cuomo and state lawmakers approved a law allowing the industry to operate in New York, which allowed the companies to reopen their operations to New York-based users.
The law followed a big-money lobbying push by FanDuel and DraftKings, which included a visit to the state Capitol by former NFL quarterbacks Jim Kelly and Vinny Testaverde, who were paid a total of $100,000 for their appearance.
Connolly ruled the law's attempts to regulate the daily fantasy industry violate the state constitution, which specifically bans "pool-making" and "book-selling."
“Based on all of the above, the Court finds and holds that the Constitutional prohibition upon authorization or allowance of pool-selling, bookmaking or any other kind of gambling encompasses (interactive fantasy sports)," Connolly wrote in his ruling.
The ruling only applies to daily fantasy sports, not season-long fantasy sports, which have long been allowed in New York.
