DraftKings and FanDuel Receive Legal Grace in New York During Appeal Process

Since last November, New York state has fostered a hostile legal climate towards fantasy draft leagues. However, as of January 12 of this year, fantasy draft companies have been granted fortunate temporary shelter.

Last year, the two largest fantasy draft companies operating in New York, DraftKings and FanDuel, were ordered by the state attorney general Eric Schneiderman to “cease and desist from illegally accepting wagers in New York state.” The decision also extended to other companies offering similar fantasy draft services.

Schneiderman’s rationale? Customers “are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes.” Though this holds true, the complex world of professional sports also lends fantasy sports players with a rich and developing context, meaning the construction of fantasy teams also rewards hard-earned knowledge of career statistics, and the skill to interpret that data to make predictions that are not entirely random.

Schneiderman’s decision to stonewall DraftKings, FanDuel, and by extension all other minor companies in the industry, faced immediate challenge in an appellate court. As a result of that hearing, the effects of Schneiderman’s decision were postponed until the end of 2015, and DraftKings, FanDuel, etc. were rewarded with the ability to operate in the meantime.

The companies received more such legal grace in the beginning of this year. New York Supreme Court judges will allow their continued operation while they await the conclusion of their appeal of the court order. This “permanent stay” should last until May, potentially longer, when the appeal will be heard.

FanDuel issued an official statement on the situation:

“We are grateful for the legions of New York fantasy sports players that the permanent stay entered today ensures they can continue to participate in our games here as the case progresses. We are confident that fantasy sports have always operated lawfully in New York, but we do believe that new, common-sense regulations to protect consumers and reflect the evolution and growth of the game are needed. The New York legislature, like many states around the country, is working towards such regulation, and we will work with them to achieve it.”

One of the attorneys for DraftKings, Randy Mastro, also issued a statement on the judges’ favorable decision:

"We're very grateful to the courts for continuing the stay for the duration of the appeal so that the hundreds of thousands of New Yorkers who love daily fantasy sports can continue to enjoy these contests.”