The legal battle regarding daily fantasy sports in New York State is far from over. The latest hearing was concluded without the judge ruling over the case.
The Manhattan courtroom was populated with the legal representatives and chief executive officers of major fantasy sports websites FanDuel.com and DraftKings.
The arguments lasted for two hours, at the end of which, Manuel Mendez, the New York Supreme Court Judge, said that he cannot decide the case immediately.
Cease-and-desist letters were first issued on November 11 to FanDuel.com and DraftKings.com by Schneiderman, the attorney general. He had accused the two companies of running “a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country.” FanDuel and DraftKings responded that players of daily fantasy sports have “control or influence” on the results of the contests they take part in because they have to draft their own line up, an activity that requires skill. However, Justice Mendez noted that fantasy sports players cannot influence the performance of players on the field.
Over the past seven months, FanDuel and DraftKings have been presenting data to show that the skilled players are winning over and over again, a fact that clearly indicates that fantasy games are “predominantly skill-based.”
In a statement issued post hearing, DraftKings said:
Today, we presented compelling evidence that Daily Fantasy Sports competitions are as legal now as they have been for the past seven years that New Yorkers have been playing them. We look forward to Justice Mendez’s ruling.
On the other hand, the attorney general’s office said:
We were glad to have the opportunity to make our case to the court that DraftKings and FanDuel are operating illegal gambling operations in clear violation of the law, and we await the judge’s decision.
Recently, David Boies, the legal representative of DraftKings, was interviewed by Fortune. He said that neither the entry fee paid by fantasy sports players nor the prize that they receive is determined on the basis of an outcome. He said that fantasy players have to pay a fixed fee to play for a fixed prize pool.
He argued:
In other words, DraftKings does not stake or risk anything, and the player doesn’t stake or risk anything. They pay a fixed fee, and either win or don’t win a prize.
Second, even if this were a bet, it would be a bet on a contest of skill, the outcome of which the DFS player clearly influences.
Right now, one cannot say how much Justice Manuel Mendez will be influenced by this argument. His decision, however, will have a huge impact on the future of the billion-dollar fantasy sports industry in the US, especially as the gambling laws of eight US states have language similar to that in the New York laws.
