The New York State Supreme Court ruled yesterday that the New York State Department of Financial Services (DFS) has no regulatory authority over online gambling websites. This decision will have a negative impact on the state’s campaign to legalize online gaming in New York.
The New York Supreme Court ruled Monday that the state’s controversial Division of Taxation cannot deny customers betting on sports, games of skill, or contests featuring skillful or lucky chance, like poker and keno (also known as “bingo”) on the grounds that they are games of chance. The ruling overturned a lower court decision that said DFS could refuse those customers entry.
Main DFS in New York State is now no-man’s-land In late October 2018, the New York State Supreme Court ruled on the issue of daily fantasy sports games (DFS) in the state. After this ruling, DFS games were considered illegal gambling under the state constitution and could no longer be defined as games of skill. In doing so, the court essentially overturned a law that classified DFS as a game of skill and explicitly legalized the activity for players in the state. The law was passed and signed by Governor Andrew Cuomo in 2016.
Mad State DFS in New York
Thanks to a recent decision by the New York State Supreme Court, the New York State Gaming Commission (NYSGC) has been forced to end its oversight of DFSs operating in the state. On Monday, the Buffalo News reported that the NYSGC had removed all mention of the DFS industry from its website. A Commission spokesperson also confirmed that the NYGC can no longer regulate this type of competition due to a recent court ruling. According to the newspaper, New York City has become the Wild West of the Daily Fantasy Sports industry. In fact, DFS is illegal in New York, but by proposing it, it is decriminalized, and as long as it remains illegal, it cannot be licensed or taxed. The DFS sector in New York will remain unregulated for some time. This confusion is likely to continue, at least until the State appeals the decision. While most people expect such a call to be made, it may not happen until next month.
Anti-gaming groups have contributed to the chaos
The case was brought by an anti-gambling group. They argued that New York State should not have legalized DFS contests. They could only have done this through a public referendum that would have changed the constitution. The judge agreed with the groups and ruled that the DFS was unconstitutional. Unfortunately, this has led to much confusion. This has created a situation where DFS sites can continue to operate as they always have, but without any oversight or even fiscal constraints. That can’t have been the intent of the anti-gaming groups or the court, especially in the middle of the NFL season. In a stunning decision, acting Supreme Court Justice Gerald Connolly rejected the legislature’s attempt to legalize DFS. However, a provision in the old law that precluded criminal penalties for DFS operators was retained. He also ruled that the legislature was within its rights to exclude DFS from New York’s gaming laws.
No – Human land for all
It appears that DFS is currently illegal in New York, but offering DFS is not a criminal offense. While this activity remains illegal, it is not subject to licensing or taxation. The FanDuel group released a statement to that effect on Monday. They said they could not challenge the decision because it was questionable. The statement reads: This decision makes clear that the New York legislature’s decision to exempt fantasy contests from the definition of illegal gambling cannot be challenged in court. As a result, we will continue to offer fictional sports to New Yorkers. FanDuel Group added that although it is no longer bound by its licensing agreements, it believes strongly in a regulated market and will therefore seek to restore regulatory oversight. The statement reads: We also believe in the benefits of regulation and will cooperate with efforts to restore regulatory oversight on a permanent basis. An attorney for the anti-gaming groups, Cornelius Murray, told the Buffalo News that his clients are currently considering several options. He also acknowledged that the laws regarding DFS are a bit confusing right now. He added that it’s hard to speculate on how this will all play out, but with a little time, this problem can easily be solved. He said: We are currently in this proverbial no man’s land. I think the dust will settle, but for now it’s a vague phase, hard to describe.