Daily Fantasy Sports are now officially legal in the state of New York with Gov. Andrew Cuomo’s signature classifying them as “games of skill” rather than “games of chance” on a bill finally passed Wednesday.
New York Attorney General Eric Schneiderman had sought to put a stop to DFS in New York last year in calling the contests “illegal games of chance” or essentially another way to say they constitute gambling.
That was also what Nevada had ruled last October when the state banned DFS. The Nevada Gaming Control Board noted that “pay-to-play daily fantasy sports cannot be offered in Nevada without licensure.” DFS leaders DraftKings and FanDuel declined to apply for licenses in Nevada fearing they would admit to being classified as gambling if they did, hurting their ability to operate in other states.
The New York win proved that both companies made the right move, at least for the time being.
Schneiderman had forced the closure of New York operations for DraftKings and FanDuel in March until the state legislature could determine the legality. In June, a bill came together that addressed the desperate need for regulation of the growing industry, before Governor Cuomo ultimately signed off on it.
Cuomo said he believes the new law strikes the right balance between oversight and consumer protection, with an estimated $4 million in revenues received from operator fees being earmarked for education.
Approximately 3.5 million New Yorkers had enjoyed playing DFS games and will again have the opportunity to win money legally in the state. Operators such as DraftKings and Fan Duel who were in business before November 10 will be able to restart their businesses as soon as they are issued a temporary permit from the New York Gaming Association, which was formed to regulate the different companies and their practices.
The New York Gaming Association will oversee the regulatory structure and enforce rules the operators will need to follow. For example, three-year licenses will be issued, and company executives will be subject to criminal background checks to prevent fraud.
The integrity of the DFS games is extremely important and the basis behind the law getting passed. Cuomo reportedly could have gone either way with the bill, as some believe he did not want the legislature to pass it originally. However, its passage was enough for him to go the other way and support it, a move others expected.
Opposition groups like The Coalition Against Gambling in New York did not even lobby Cuomo to veto the bill because they knew it would be a waste of money. The fear is that the bill’s passage will open up a can of worms, leading to different forms of internet gambling becoming legal next, including sports betting and online poker.
Schneiderman is not giving up the fight either and will pursue consumer fraud and advertising-related abuses by DraftKings and FanDuel moving forward in an effort to shut them down again. Regardless, DFS players in the Empire State are back in the game.