NY’s Daily Fantasy Sports Law Contains Major Flaw

NY, DFS, FanDuel, DraftKings

In following up on an earlier post we wrote about the waiting game set up by the New York State government for daily fantasy sports, we are happy to report that DFS businesses like FanDuel and DraftKings are back open for business in New York.

NY Gov. Andrew Cuomo signed a bill into law allowing fantasy sports operators to apply for a license in New York state. The new New York Gambling Law also makes provisions for operators to serve the market almost immediately via a temporary permit.

And this is where a controversy may still be brewing. According to DFS advocates, the NY State Gaming Commission erred in implementing the law because DraftKings and FanDuel agreed to cease operating  in order to ensure that they would be eligible for a license.  According to Legal Sports Report, the application itself states that a DFS operator is eligible if it makes available an interactive fantasy sports platform offering contests to persons located in New York State who have also offered such a platform prior to November 10, 2015, and requires evidence of the same.

With the new law taking effect, smaller DFS businesses now have a significant barrier to entering the New York market, mainly because this language within the application makes prior operations a necessity to obtain the license. Smaller operators that may have avoided the New York market waiting for the legal dust-up to settle are, as the law is written, excluded from the market. The application, as written, also stops new operators not in existence prior to November of 2015 from operating in New York.

Regardless of whether this was an unintentional error in drafting or an intentional exclusion of legitimate businesses that are now being punished for following the existing law, the application language will be an issue that will probably be played out in the court of public opinion and, possibly, in New York and federal court.

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