DFS Ruled Constitutional in New York State

Daily Fantasy Sports have been ruled constitutional in New York, the New York Court of Appeals said in its decision released on Tuesday. It’s another massive win for New Yorkers, as the state also legalized mobile sports betting on January 8, 2022.

https://twitter.com/NYSAppeals/status/1506254431742046213https://twitter.com/FSGAtweets/status/1506294947422605314

Interactive fantasy sports contests were deemed legal gambling activities because contestants use significant skill to select their rosters, create fantasy teams, and therefore influence the outcome of the fantasy contests between IFS participants.

Here are a few excerpts from the New York Court of Appeals report.

“IFS contests have been a popular form of entertainment for over 40 years and the pastime is played by millions of New Yorkers. Participants of IFS contests create virtual “teams,” drawing from their knowledge of the sport and athlete performance to draft rosters comprised of simulated players based on professional athletes. These virtual teams— composed of athletes who play for different real-life teams—compete against virtual teams compiled by other IFS contestants. The performance of simulated players on an IFS roster corresponds to the performance of the real-life athletes—that is, participants of IFS contests earn fantasy points based on how their selected athletes perform specific acts in actual sporting events that occur after the IFS contest has closed. However, the outcome of an IFS contest does not mirror the success or failure of any real-life athlete or sports team. This is because IFS rosters do not replicate real-life teams, IFS scoring systems are premised on an aggregation of statistics concerning each individual athlete’s performance on specific tasks, and IFS contests pit the rosters of participants against one another rather than tying success to the outcome of sporting events. IFS contestants pay entry fees to participate, and the pre-set prizes paid to the most successful participants—along with operator revenues—are typically drawn from those entry fees.”

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“Traditionally, IFS contests spanned the duration of a sporting season and, throughout the season, participants could “manage” their team by trading players, picking up free agents, and adjusting their lineups. In more recent years, operators began also offering weekly and daily IFS contests generally structured in the same manner, with IFS contestants assembling virtual teams of players drawn from multiple real-life teams within the confines of an assigned salary cap. Success in weekly or daily IFS contests, as with season-long competitions, does not depend on the performance of a single athlete or team. Notably, many professional sport leagues support fantasy sports, viewing the virtual games as a way to engage fans and partnering with IFS operators to promote the competitions.”

This ruling should carry significant weight for future legislation in other states and help pave the way for future legalization of sports gambling and DFS.

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