New York Gaming Association Wants Fantasy Sports Tied to the Existing Land-Based Gaming Industry

Last updated on November 2nd, 2018

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The New York Gaming Association argued this week that fantasy sports should not be legalized in the state of New York, unless fantasy sports was tied to the existing brick-and-mortar gambling facilities in the state. The NYGA asked state legislators to kill any bill which would legalize daily fantasy sports, unless the DFS gaming was tied to an existing license for a casino or racino (racetrack-casino) in the state.

James Featherstonhaugh, President of the NYGA, said his organization “is unanimous” against daily fantasy sports legislation, unless it is legalized “in cooperation with the existing industry”. While outsiders might see this as a blatant money-grab by the operators, the speculation is the filing might be enough to derail any pro-DFS legislation.

“A Hypocritical BId for Fantasy Sports Action”

The New York Post termed the NYGA’s call as a “hypocritical bid for a piece of the fantasy-sports action.” The Post implied the New York gaming industry was complaining that daily fantasy sports was immoral and dangerous, unless the existing gaming operators got their share of the action.

The fantasy sports bill was expected to receive a vote by June 16, which is one of several deadlines that is important to the daily fantasy sports industry. In January, FanDuel and DraftKings agreed to stop accepting play from New York DFS competitors until an appellate court decided two lawsuits filed by the companies against the New York Attorney General’s Office.

Eric Schneiderman’s Radical Stance

In November 2015, New York Attorney General Eric Schneiderman announced that all fantasy sports — including daily fantasy sports like DraftKings and yearly fantasy sports like local fantasy leagues — where illegal forms of gambling under New York state law. DraftKings and FanDuel each filed a seperate lawsuit, after Schneiderman gave the two top DFS companies 5 days to withdraw from the New York market.

The companies’ lawsuits did not get Schneiderman’s edict overturned, but it did allow them to continue to accept players from New York until the court case was resolved. Frustrated by his inability to stop DFS gaming with a word, Eric Schneiderman attached a provision to his counter-suit which would require the companies to pay all New York players back their losses since they began playing — plus %5,000.

Schneiderman’s Tactics Worked

This raised the stakes and may have put pressure on the companies to work with the New York AG. DraftKings and FanDuel agreed to suspend operations until an appeals court heard the case in September. One provision allowed the DFS companies to gain legal status before the appellate case, if the New York State Legislature approved DFS gaming before then.

That made June 16 an important deadline, because it was one of the last dates before September when the legislature was in session. Most analysts expected to see a fantasy bill passed by New York lawmakers, because fantasy sports is a mainstream hobby in the United States — 50 million players or 25% of the adult population plays. Many legislators play fantasy football with friends and co-workers, so most lawmakers are likely to have a much less extreme view than Eric Schneiderman.

About the NYGA

The problem is, the NYGA is a big donor to New York politicians. The casinos and racetracks of New York state have built up a large bankroll over the decades, and that money can be used to buy the influence of some politicians. By pleading poverty, the gaming operators of states often try to stop competition through legislation. The phenomenon is not exclusive to New York state, but it is seen as greedy anywhere it happens.

For instance, Rush Street Gaming is build a casino near Schenedtady. Greg Carlin of Rush Street Gambling has called for a “high regulatory barrier” to daily fantasy sports. The fact is, fantasy sports is arguably the most popular form of gaming in the United States. If players can stay at home and play fantasy sports for real money, they might be less likely to drive out to Schenectady to gamble in a brick-and-mortar casino. Certainly, the odds of winning are better.

Conventional Wisdom

Conventional wisdom is the New York State Legislature wants to pass a fantasy sports bill, the wheels of legislative justice are slowly turning, and on June 16 DraftKings and FanDuel should be able to breathe a sigh of relief over 10% of their revenues. The political winds are blowing and it is an election year. Time after time, in states like California, Nevada, and Pennsylvania, lawmakers have shown they respond to the whims of brick-and-mortar casinos operators.

If New York is similar to other states, then the path to legalization for daily fantasy sports is going to be a hard battle. Do not be surprised to find that the DFS provisions of any fantasy sports bill are more complicated than supporters of daily fantasy sports hope it will be.