[toc]New York Attorney General Eric Schneiderman defended the legality of a new daily fantastic sports law in a filing this week in a case before the Supreme Court of Albany County.
This, of course, comes after NY AG spent most of the last year saying that DFS sites DraftKings and FanDuel operated illegally under old state law. The legal wrangles involving Schneiderman ended in October, with a settlement of $ 6 million each with DFS operators resulting from false advertising claims.
The backstory of the DFS trial in New York
In this case, a group of citizens filed a complaint, claiming that a law legalizing and regulating the DFS in new York – adopted last year – violates the constitution of the state. This effort is being led by an anti-gambling group called Stop the predatory game.
The defendants in the case are Governor Andrew Cuomo – who signed the bill – and the New York State Gaming Commission, which is now in charge of DFS regulation. As State AG, Schneiderman and his office act as counsel.
As part of the case, Schneiderman filed a “memorandum of law in support of the motion to dismiss” in the case. You can see the entire memo here.
Schneiderman’s argument on DFS
In the new case, Schneiderman tries to refute the complainants’ claim that New York’s DFS law violates Article 1, section 9 of the state constitution, which reads, in part:
No law will be adopted … except as provided below, no lottery or sale of lottery tickets, joint sales, betting or any other type of game, with the exception of lotteries managed by the State … The exception of mutual betting on horse racing … and with the exception of casino games in a maximum of seven establishments authorized and prescribed by the legislature, will henceforth be authorized or authorized in this State …
AG argues New York can define gambling however they want
The crux of Schneiderman’s argument is that the legislator can define the terms of the constitution as they see fit:
Article I §9 of the State Constitution expressly delegates to the legislature the power to enact appropriate laws to implement the constitutional ban on “gambling” – a term that the Constitution itself does not define.
In accordance with this authority, the legislator enacted L. 2016 Ch ~ 237 (“Ch. 237”), which resolved the legal status of specific internet games known as interactive fantasy sports and stated that such competitions did not fall within the definition of gambling in New York as defined in the criminal law.
Although Article I §9 does not define gambling, the delegation to the Legislative Assembly of the responsibility “to pass appropriate laws to prevent offenses …” necessarily gives the legislature the flexibility to determine what conduct constitutes (and does not constitute) prohibited gambling in New York City.
The New York legislature has “great latitude”
Schneiderman’s brief also argues that the state legislature has the ability to legislate on things that are not contemplated or explicitly described by the constitution:
Here, the adoption of Ch. 237 by the legislature assumes that it is a constitutional exercise of its duty to pass appropriate laws with respect to the definition of permitted and prohibited gambling activities.
The rationale for giving the legislature wide latitude to assess the appropriate scope of gambling laws in New York is reinforced for interactive fantasy sports, online gambling that until recently did not exist, does not exist. were not contemplated by the drafters of the Constitution or general gambling laws, and have attributes not present in traditional gambling contests.
As the Court of Appeal stated in Dalton v. Pataki, 5 NY3d to 265, “[t]The language of the Constitution is not rigid enough to prevent this type of updating and modernization.
Other states have done the same
One of Schneiderman’s final arguments is that a variety of state legislatures have come to the same conclusion that DFS should not be treated as a game. He lists the states that DFS legalized and regulated last year by defining them as outside the game code.
The analysis ignores the fact that a variety of GAs in many states have felt that the DFS game under current (or previous) state law.
Previously, Schneiderman said the DFS was unconstitutional
Schneiderman is obviously in the awkward position of defending something his office fought against throughout 2016, at least in part for constitutional reasons. At a time cease and desist letters to DraftKings and FanDuel and a injunction request – and indeed throughout the legal battle – Schneiderman raised the constitution.
From the letters C&D:
The illegal and unlawful conduct reviewed by our Office includes, but is not limited to, the following:
(a) Operating a business of creating books or other types of gambling in violation of article I, section 9 of the Constitution of the State of New York;
And a presser after the request for an injunction:
The Constitution of the State of New York has prohibited betting and other forms of sports betting since 1894. Under New York law, a bet constitutes a game when it depends on either one (1) “possible future event”. no [the bettor’s] control or influence ”or (2)“ contest of chance ”.
Daily Fantasy Sports (“DFS”) bets fit these two definitions perfectly, although by meeting only one of the two definitions, DFS would be considered a game. DFS is nothing more than a rebranding of betting sportsmen. It is clearly illegal.
Obviously, Schneiderman would now argue that the DFS language in the new law would have meant that he would not have taken such steps in the past, if the law had existed before.
What’s next for the DFS case?
The state’s request to dismiss the case will be made on March 24, according to a notice filed by Schneiderman. Following this, the lower court would then dismiss the case or rule on the merits.
Regardless of the decision, the case is subject to an appeal up the food chain in the New York court system.