DraftKings and FanDuel NY operations placed in jeopardy with court ruling

A judge in New York has ruled that daily fantasy sports (DFS) contests are illegal gambling within the state of New York, placing DraftKings and FanDuel’s future in the state in doubt.

In his decision, Acting Supreme Court Justice Gerald W. Connolly asserted that DFS contests should be prohibited even if deemed a skill game.

It follows a legal case brought by several gambling addicts, trying to overturn an earlier legislative decision to allow DFS in the state, arguing that the existence of a material degree of skill in DFS does not exclude it from being gambling, thanks to the role of chance.

Lawyers acting on behalf of DraftKings and FanDuel dismissed this assertion arguing that the state was acting within its constitutional right to devise new gambling laws.

However, the judge ruled in favour of the plaintiffs, whose lawyer, Cornelius Murray, said: “I’m very pleased, naturally, and I think the judge has made it unequivocally clear that this is gambling and that it would violate the constitution for the state to continue to allow it to happen.’’

Neither DraftKings or FanDuel have ceased operations in the state, with DraftKings attorney David Boise stating that the company would continue to operate and would study the court’s decision.

In 2015, former New York Attorney General Eric Schneiderman ordered both DraftKings and FanDuel to cease and desist all operations based on the assertion that DFS was gambling and was therefore prohibited in the state.

However, the New York legislature amended this legislation in 2016, reclassifying DFS games as games of skill and not games of chance. Its rationale for this change was that most DFS teams are selected based upon the skill and knowledge of the participants rather than at random.