WEEKLY FEATURE: New York High Court Says DFS ‘Skill’ Gaming

New Yorkers who play daily fantasy sports have been in limbo for years as courts sorted out whether the games should be considered gambling or skill-based. The New York State Court of Appeals has spoken: skill.

WEEKLY FEATURE: New York High Court Says DFS ‘Skill’ Gaming

In a bygone era, fantasy sports involved a group of fans who came together each season and drafted players from existing pro rosters. Then the real games began, and you won or lost based on how the real player performed. Throughout the season, you as the “owner” of your drafted team could make trades, change the lineup and so on, but what happened between the lines was out of your hands.

Meanwhile, the leagues and sportsbooks like FanDuel or Draft Kings made money from registration fees. Then somebody got the idea that fantasy sports smacked of gambling and should be treated as such. So the courts got involved.

Last week, the New York State Court of Appeals ruled that such contests are games of skill and not gambling under the state constitution, in confirmation of a 2016 state law. The Fantasy Sports & Gaming Association (FSGA) was tickled pink. So were 3.5 million players in New York State. And now the association would like the New York Gaming Commission to finalize preliminary rules and regs issued in 2017.

An appeals court’s decision last year found interactive fantasy sports violated the state constitution’s ban on gambling. The games allow players to assemble a roster of athletes in a sport, using individuals performance statistics to determine the winner. They annually bring in hundreds of millions in entrance fees statewide.

In a 4-3 high court ruling, Chief Judge Janet DiFiore wrote that the gambling prohibition doesn’t include skill-based competitions in which players who win a prize exercise “substantial influence” over the contest’s outcome.

DiFiore wrote that the outcome of an interactive fantasy sports contest “turns not on the performance of real-life athletes, as it would with respect to a bet or wager but on whether the participant has skillfully composed and managed a virtual roster so as to garner more fantasy points than rosters composed by other participants.”

Dissenting Judge Rowan Wilson wrote that the court “effectively amends” the state constitution. The majority opinion of why “something everyone knows is gambling is not actually gambling” recalls the famous scene in Casablanca in which Captain Renault said he was “shocked, shocked” to find there was gambling at a nightclub, just before being handed his winnings, according to the Associated Press.

The court issued its 58-page majority opinion March 23. The lower court had ruled that DFS contests are games of chance not skill. Therein lies the distinction. If the court sided with the lower court and confirmed DFS as a game of chance, it’s considered gambling and gambling can only be allowed in New York by way of a constitutional amendment. The legislature cannot regulate DFS on its own.

Had the majority opinion gone the other way, DFS platforms like DraftKings and FanDuel would have to offer free-to-play games or no games until the constitutional was amended, according to Play USA.

The ruling also agreed with the growing consensus across the United States as 25 states have passed laws confirming paid fantasy sports contests are legal games of skill.