Get Ready to Play: Court of Appeals Upholds NY Fantasy Sports Law - Klein Moynihan Turco LLP

Get Ready to Play: Court of Appeals Upholds NY Fantasy Sports Law

The multi-year court battle over the legality of fantasy sports in New York (“NY”) has finally ended. On March 22, 2022, the NY Court of Appeals (“COA”) released its decision in the case entitled White v. Cuomo, finding that fantasy sports contests are legal under the State’s constitution. The COA (the highest court in NY) explained that fantasy sports contests do not constitute gambling and, as such, the State legislature had the authority to regulate such contests as games of skill. 

The History of NY Fantasy Sports Law

Readers will recall our reporting on the fantasy sports battle as it progressed through the NY legal system.  In 2016, the State Legislature enacted the NY Interactive Fantasy Sports law, which legalized fantasy sports and declared that such contests do not constitute gambling within the meaning of the State Penal Law. The NY law permits fantasy sports contests in which participants pay an entry fee to the contest operator, select rosters of real-world athletes, and compete against other participants for cash prizes based on the performances of the chosen athletes in multiple real, live sporting events. Please note that operators need to obtain a license before offering fantasy sports contests in New York State. 

Soon thereafter, in 2018, a NY district court found that the NY fantasy sports law violated the State’s constitutional ban on gambling. In 2020, a New York State appellate court affirmed the lower court decision and struck down that portion of the law that statutorily protected the industry. This appellate court decision was quickly appealed to the COA, which held oral arguments in October 2021. 

Fantasy Sports are Legal Games of Skill in NY

On March 22, in a 4-3 ruling, the COA reversed the lower court decisions and declared that fantasy sports contests did not violate the State’s constitutional ban on gambling. The COA clarified that NY gambling laws do not preclude “skill-based competitions in which participants who exercise substantial influence over the outcome of the contest are awarded predetermined fixed prizes by a neutral operator.” In addition, the COA found that fantasy sports are correctly characterized as lawful skill-based competitions because “contestants use significant skill to select their rosters, creating fantasy teams, and therefore have influence over the outcome of the fantasy contests.” Accordingly, the COA concluded that fantasy sports contests, as described in the NY fantasy sports law, do not constitute illegal gambling activities, and may be regulated as legal games of skill.

Hire a Fantasy Sports Lawyer

Please note that fantasy sports contests will only be considered legal games of skill in NY if they comply with the requirements of the NY fantasy sports law and other regulations. Operators in this space are encouraged to stay ahead of regulatory and legal developments by retaining and working closely with experienced fantasy sports lawyers. An experienced fantasy sports lawyer can assist in determining relative risk levels associated with certain operations by evaluating applicable statutes, case law, and attorney general opinions. 

If you are interested in learning more about this topic or pursuing a fantasy sports venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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Photo by Dominik Kuhn on Unsplash

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