The New York Law Blog: Reform Group Files Suit Claiming NY's Daily Fantasy Sports Law Is Gambling, Not Skill
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Tuesday, October 11, 2016

Reform Group Files Suit Claiming NY's Daily Fantasy Sports Law Is Gambling, Not Skill

NY Legal News, NY Litigation
An anti-gambling reform group filed a lawsuit last week claiming that New York's "Daily Fantasy Sports" law violates the state constitution by characterizing daily fantasy sports contests as games of skill, rather than games of chance.

The suit was filed in New York Supreme Court in Albany County by an organization called Stop Predatory Gambling on behalf of 4 New York resident plaintiffs who claim to have been negatively impacted by gambling. According to published reports, the suit "seek(s) to protect the public from predatory gambling consistent with the constitution."

Article 1, Section 9 of the state constitution, states, in part that "[n]o law shall be passed… except as hereinafter provided, no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state… except pari-mutuel betting on horse races…  and except casino gambling at no more than seven facilities as authorized and prescribed by the legislature shall hereafter be authorized or allowed within this state." The lawsuit argues that “interactive fantasy sports” as defined in the law is "gambling that falls within the express prohibition” discussed in the state constitution.

The suit points to New York Attorney General Eric Schneiderman's legal opinion from last November that declared daily fantasy sports companies like FanDuel and DraftKings were operating in violation of New York state gambling laws. However, that opinion was issued before New York passed legislation exempting fantasy sports from state gambling law. Schneiderman's office has since stated it will defend the new DFS law.

This blog has been carefully tracking the news surrounding New York's adoption of "daily fantasy sports" laws, including the process of developing the legislation that eventually passed this summer, as well as discussed possible flaws in the new law's application. However, nothing in our analysis indicates that the new DFS law violates the state constitution.

Opposition to the lawsuit argues that New York's state constitution specifically gives the legislature the power to define what gambling is and is not - a power which it exercised by passing the DFS law this summer.
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.