The New York Supreme Court heard arguments from lawyers representing DraftKings, Fanduel, and the State Attorney General on Wednesday. Each side is arguing about the legality of daily fantasy sports in the state of New York.
Lawyers for the daily fantasy sports sites claim their games are games of skill and legal under federal and state law. Lawyers for the Attorney General argued that the companies are promoting illegal gambling.
Describes DFS as a Game of Chance
Assistant Attorney General Kathleen McGee described why the AG's office believes daily fantasy sports is a game of chance. She said that the outcome of contests depends on results which are out of control of the contestants. Entrants depend on the accumulation of fantasy points based on real world game stats, such as touchdowns, runs scored, or baskets made.
The assistant attorney general also said events like injuries, official incompetence, and rain delays also affect the outcome of the game. McGee might have been referring to a famous case where a million dollar DFS contest came down to a rain delay in a Cincinnati Reds baseball game. Because the rule states that rain delays are considered ended ballgames, a lucky amateur defeated a room full of professional grinders.
Skill Element Is Irrelevent
In describing how DFS works, McGee said that people set lineups and wait for the results to be announced, which is a far cry from betting on a game of skill like billiards or darts. Fantasy football owners in yearly leagues understand how the game works, though in daily or weekly fantasy sports, everything comes down to the results of a single set of games during one calendar day.
McGee arguments underscored a key point made by Attorney General Eric Schneiderman when he first announced his ban on DFS gaming. She argued that the amount of skill involved in winning and losing does not matter when it comes to legality, because games which have any degree of chance to them are illegal.
Kathleen McGee told the judges, "Each of these events is out of the control of the bettors. If chance is a material element of these games it doesn't matter how much 'skill' is involved."
FanDuel Lawyer's Argument
John Kiernan, a lawyer who argued on behalf of FanDuel, said that success in DFS gaming requires a high degree of skill. Kiernan made the innovative argument that "separate and apart" from the contests taking place on the field. He said that a game-outside-a-game takes place, which is actually separate from the sporting event itself.
Kiernan compared being a daily fantasy sports owner to being a general manager in an organized pro team sport. In the NFL, NBA, or Major League Baseball, a general manager is hired by the owner to manage the franchise. This person is responsible for the product on the field, including the hiring of coaches and scouts, along with the selection of players. Through trades, free agency, and drafts, the general manager builds the best possible team, according to his or her knowledge.
The lawyer suggested a general manager has a role which is separate from the game on the field, but this general manager needs skill and knowledge to play. Because it involves a bigger picture than one single ballgame, a GM is playing a separate game when he makes his moves. While one single game might go against his team, in the overall picture, the good GMs are the ones who are a success. In much the same way, good DFS owners are successful over time, even if one contest does not go their way.
Eric Schneiderman's Ban
The case before the New York Supreme Court stems from Eric Schneiderman's cease and desist order he sent to FanDuel and DraftKings in early November. He gave them 5 days to stop accepting real money play from New York residents, or said they would be in violation of state law.
FanDuel and DraftKings each filed restraining orders, but a New York judge denied their requests. Instead, he announced a hearing for the Wednesday, a day before Thanksgiving. Lawyers for both sides had just over a week to prepare arguments. It is still not known when a decision on the case will be announced, though on late Wednesday, it was said that Judge Mendez's decision would be delayed.
After the day's courtroom arguments, DraftKings released a statement which said its lawyers had "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."
