New York’s Highest Court Orders Reargument in Daily Fantasy Sports Case

The New York Court of Appeals has ordered reargument in a case that will decide the fate of daily fantasy sports (DFS) in the state. Legal experts say the move could indicate the court is deadlocked on the issue.

The court, the state’s highest, will determine whether DFS games are skill or chance, and specifically whether the legislature overstepped its authority when it legalized the contests in 2016.

The court’s seven-judge panel has been pared down to six after Judge Michael Garcia recused himself from the case. Garcia was part of a 2015 internal advisory board appointed by FanDuel to examine allegations that one of its employees engaged in DFS contests while being party to insider information. His absence creates the possibility of deadlock.

Albany Law School professor Vincent Bonventre told Law.com that a split three-three vote may well be the reason for the reargument order.

DFS Carve-out

Anti-gambling groups sued the state arguing that the 2016 law violates the state constitution. Gambling is illegal in New York unless an exception is made via a constitutional amendment, which requires a public referendum.

The legislature created a carveout for DFS on the grounds that it is not a gambling game, but a game of skill.

So far, the trial court has ruled that the 2016 law is contrary to the state’s ban on gambling. While it agreed there was skill in selecting a team, it determined that players “cannot control how the athletes on their teams will perform in the real-world sporting events.”

After California, New York is DraftKing’s and FanDuel’s second-largest market. The two companies would be forced to cease DFS operations there entirely should the court ultimately rule against in favor of the plaintiffs. New York’s planned introduction of mobile sports betting would soften that blow, however.

Blessing in Disguise?

The order for reargument could also prove to be a blessing for DFS sites, especially if they’re rescheduled for next year, after the upcoming retirement of Judge Eugene Fahey.

Fahey was highly skeptical of the state’s oral arguments when they were presented in early October.

You’re arguing that I cannot place a bet [online] on whether the Buffalo Bills win their next game, but I can place a bet on whether or not their lead receiver Stefon Diggs catches the ball ten times or six times,” asked the judge.

“It’s almost an Orwellian argument,” he continued. “It’s like saying from 1984, ‘War is peace. Freedom is slavery. Fantasy sports is not gambling. It’s really like the stock market.’ Those things are directly contrary.”