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New York Senator Introduces Novel Fantasy Sports Law Amendments

On April 11, 2024, New York Senator Joe Addabbo introduced a bill proposing major changes to New York’s fantasy sports law. S9044 seeks to alter the landscape of fantasy sports contests in New York in several ways. As our readers are aware, last October, the New York State Gaming Commission (the “Commission”) adopted New York Rule 5602.1(a)(4) (the “Rule”), a law outlawing certain fantasy sports contests, such as “pick’em games,” that are based on proposition betting. A few months later, the Commission resolved its first major fantasy sports law enforcement action, entering into a $15m settlement agreement with SidePrize LLC d/b/a Prize Picks (“PrizePicks”) for allegedly violating the new Rule.

Senator Addabbo’s proposed bill is a significant departure from New York State’s existing fantasy sports law regulations. Although S9044 seeks to raise the legal age to participate in fantasy sports contests, it redefines them as “games of skill.” This change is significant, as contests of skill between multiple contestants are permissible pursuant to New York Rule 5602.1(a)(1) & (2).

What is the Current Fantasy Sports Law Landscape in New York?

New York’s fantasy sports law, codified in the State Codes, Rules and Regulations Section 5602.1(a)(4), states that: “[c]ontests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting. Contests in which a contestant must choose, directly or indirectly, whether an individual athlete or a single team will surpass an identified statistical achievement, such as points scored, are prohibited.” During the Rule’s promulgation, the Commission commented that “pick’ems” essentially constitute sports betting and are not fantasy sports contests “simply because an operator labels [them] as such.” To the Commission, entering a “pick’em” contest is sports betting by another name.

Although it ultimately agreed to settle the Commission’s claims and cease operations, PrizePicks previously advocated that “pick’em” contests were unregulated games of skill, unlike traditional sports wagering.

What is the Potential Impact of S9044?

S9044 would significantly alter New York fantasy sports law in several respects:

· The legal age for fantasy sports contests would be raised from 18 to 21.

· A fantasy sports contest would be defined to now include “a game of skill wherein two or more contestants compete against each other, including contests wherein participants select whether athletes, in the case of sporting events, shall accumulate more or less than a target score.” (emphasis added).

· Target score would mean “a numerical figure established by an operator that is derived from a single athlete’s accumulated statistics, multiple statistics or a fantasy score.”

The proposed bill’s new definitions would remove certain fantasy sports contests from the purview of Rule 5602.1(a)(4). These contests would contemplate the entry by two or more contestants into a contest to guess whether statistics accumulated by more than a single team/athlete exceed a target score. The contestants would pay an entry fee and make their “picks” with regard to target scores set by the operator. The bill would also open certain proposition bets, such as the Super Bowl coin flip and season long stats (e.g. sacks in the NFL) leaders, to New York residents.

Why is S9044 Relevant?

S9044 has massive implications for New York State as it seeks to tap into a market which would likely result in significant revenue. This bill was just introduced and has a long way to go in the legislative process. Notwithstanding whether the bill actually becomes law, it makes clear that the regulatory landscape, especially as it pertains to contests of “skill” and what types of contests are considered fantasy sports as opposed to sports betting, is unsettled.

Whether your business operates a sports wagering or daily fantasy sports platform, it is necessary to stay current with the most up-to-date regulations. Compliance is not a simple undertaking, as the language of applicable gaming regulations is often complicated.

The attorneys at Klein Moynihan Turco monitor evolving fantasy sports and sports wagering regulations so that clients continue to remain compliant with applicable laws. If you require assistance with gaming law compliance, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.
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