NY court rules DFS constitutes illegal gambling

The New York Supreme Court agreed with a 2018 decision which said the state had acted unlawfully in expanding state gambling laws to include so-called interactive fantasy sports (IFS) in 2016.

At the time, IFS contests were classified by the state as games of skill rather than games of chance under article 14 of the New York state Racing, Pari-Mutuel Wagering and Breeding Law.

Its rationale for this change was that most DFS teams are selected based upon the skill and knowledge of the participants rather than at random. Under this amendment, IFS was deemed not to be classified as gambling.

However, under New York state law, all changes to gambling laws must be put to public vote, as provided for under the state’s constitution. Gambling activities are deemed unconstitutional until the state amends the constitution to include them.

Gaming lawyer Dan Wallach told Bloomberg Tax: “It’s a nine inning game and the most significant part of the game has yet to unfold.

“What ultimately matters is what the state’s highest court says,” Wallach said.

State Senator Joseph Addabbo said: “While the ruling from the New York Appellate Division, Third Department, was unfortunate, the legislature clearly considered fantasy sports to be a game of skill when it passed the law, and I expect the Court of Appeals to reverse the decision.”

Addabbo said he did not expect the ruling to impact eventual implementation of mobile betting laws in the state.

DFS operators DraftKings and FanDuel both contested the case and are expected to do so again, allowing them to operate as normal in the short-term at least.

The operators will continue to operate as normal while an appeal is lodged.

In 2018, Acting Justice Gerald W. Connolly found that IFS contests were not games of skill and should be included within the definition of gambling and