Daily fantasy sports companies will be allowed to operate in New York while the state appeals a decision from October that struck down a state law legalizing those games in New York two years ago.
The state filed a notice of appeal Wednesday on the decision from Albany County Supreme Court Justice Gerald Connolly that labeled daily fantasy sports as a form of gambling, which is illegal in New York unless otherwise authorized through an amendment to the state constitution.
But as it turns out, an appeal in the case was imminent: the attorney representing the plaintiffs who sued over the law said Wednesday that he is also planning an appeal of the decision.
Cornelius Murray, a shareholder at Albany firm O’Connell & Aronowitz, said the October decision from Connolly has caused a fracas between his clients and companies that offer daily fantasy sports.
“We are concerned about the confusion that has arisen from his decision,” Murray said.
Murray is referring to reaction to the decision from FanDuel and DraftKings, two of the largest daily fantasy sports companies operating in New York. The companies argued that while the decision removed the state’s regulations on daily fantasy sports, it does not prevent them from doing business in the state.
That’s because Connolly’s decision did not criminalize daily fantasy sports in New York—it only nullified the statute approved by the state Legislature in 2016 that created regulations for companies seeking to operate in the state. Murray said that even if the decision did not explicitly criminalize daily fantasy sports, it still prohibits those companies from operating in New York.
“Now you’ve got FanDuel and DraftKings running around without any effective statute that would stop them,” Murray said.
He asked Connolly to reconsider the sections of his ruling that upheld the constitutionality of the Legislature’s decision to exclude daily fantasy sports from the definition of ‘gambling’ under the state’s penal law. Connolly has ordered the state to appear in Albany County Supreme Court in early January to argue why he should not make those changes, which would effectively require daily fantasy sports companies to immediately cease operations in New York.
“We’re giving the judge an opportunity to reconsider. If he leaves it as is, it will go up to the Appellate Division, and we would have to see how it goes there,” Murray said.
On appeal, Murray would argue the same point against Connolly’s decision: that it should be modified to reverse the Legislature’s choice decriminalizing daily fantasy sports as gambling operations.
Assistant Attorney General Richard Lombardo filed the state’s notice with the Appellate Division, Third Department on Wednesday, seeking a reversal of Connolly’s decision.
A notice of appeal provides little insight on what argument the state plans to make before the Appellate Division to convince the panel of the law’s constitutionality. The appeal will also not be imminent. The state has six months to perfect its appeal, which will then be heard by the appellate court sometime next year.
The lawsuit was brought against Gov. Andrew Cuomo and the State Gaming Commission by four plaintiffs who either have a gambling disorder or are relatives of people with a gambling disorder.
They have argued that daily fantasy sports, while incorporating some skill into gameplay, still leaves much of the game up to chance, and should therefore be classified as gambling. They argued that if state lawmakers want to legalize the games, they should be required to pass a constitutional amendment.
The process of approving a constitutional amendment in New York is arduous. The measure must first be passed by the Legislature, then has to pass a second time by a newly elected state Legislature. The issue is then put on the ballot for voters to approve. If lawmakers are required to go through that process, the earliest an amendment could go on the ballot would be after the next Legislature takes office in 2021.
Connolly could modify his decision in favor of their position, but even then the case may be reversed on appeal. Arguments from the state are scheduled to take place before Connolly for January 3 in Albany County Supreme Court.