In New York, a 2016 law based on fantasy sports has been subject to a lawsuit for some time. The lawsuit will now continue as a judge decided to not grant a motion to dismiss.
In 2016, New York enacted a law that would legalize and regulate daily fantasy sports. Nothing new these days as many states are creating such laws and allowing operators to pay a fee in order to offer services or pay no fee at all. It’s totally up the state as to what they require. Soon after New York enacted their DFS law, an anti-gambling group decided to file a lawsuit within the State Supreme Court, stating the new law was unconstitutional.
According to the state constitution, forms of gambling are limited in New York. State legislators decided to define daily fantasy sports as a game of skill to get around the limitations of gambling based on the constitution. Again, nothing new. Many states define DFS as a game of skill in order for the activity to be legal. Now, it is being determined if the state has the ability to make the determination of the activity without having to change the constitution.
No Dismissal of the Case
Since late last year, the case has remained quiet. However, this week the judge involved decided to deny a motion to dismiss. This motion was entered into the court by Eric Schneiderman, the New York Attorney General. Schneiderman is the defendant in the case as he represents the state.
The case now continues with Judge Gerald Connolly producing an order that read, that while the defendants argue that the legislation is constitutional, a presumption alone does not bar the action of the plaintiffs herein and while the plaintiffs bear the burden of proof in the action, the court has decided that the instant motion is limited.
Funnily enough, Schneiderman now has to defend daily fantasy sports after being so against the activity in the past. He gained fame due to having issued cease and desist letters to FanDuel and DraftKings stating they were operating illegally in the state. The Attorney General said that the companies were operating in violation of the state constitution.
With the new law, the legal status of the sites is ultimately resolved. Daily fantasy sports is legal for any operator in the state who has licensing.
A brief was filed by the office of Schneiderman back in January defending the law, stating that legislator could define what is gambling and what is not without having to alter the state constitution.
So, what happens now? The case will see more filings take place and eventually the judge will have to rule if the state could make this decision legally without making changes to the constitution or if they could not. It does seem that no matter the outcome, the case will probably be appealed in the state court system.
In the NYS Appeals it states:
We could find that the case is involved in legal challenges for many years to come. The industry will most likely be able to continue operating until a decision is made.