ALBANY, N.Y. (CN) — Tuesday marked the second time in six months that the New York Court of Appeals heard arguments in the quest to overturn a state law allowing fantasy sports betting, but two new judges on the court could alter the previous logjam on the issue.
While it is unclear how the high court would have ruled after the previous hearing last October, the six judges who heard the case then seemed split at best and perhaps even leaning against allowing the law to stand. This time, with seven judges hearing the case, a tie is impossible.
New York state had legalized fantasy sports in 2016 after a battle between then-Attorney General Eric Schneiderman and online gambling sites. The new law, known as Article 14, declared that fantasy sports contests were not games of chance but games of skill and knowledge and instituted a number of regulations on the contests.
Scheiderman had previously labeled the businesses a “multibillion-dollar scheme intended to evade the law and fleece sports fans across the country,” following reports that insiders at FanDuel and DraftKings had rigged the games with sophisticated algorithms. Earlier in 2016, Justice Manuel Mendez with the New York County Supreme Court sided with the attorney general and banned fantasy sports operations, despite arguments that the websites offered games of skill.
A group of anti-gambling citizens brought suit against the state, claiming sites like FanDuel and DraftKings are essentially gambling havens granted an illegal carve-out in the state constitution, which bans most forms of gambling.
In 2020, an appellate court ruled 4-1 that the fantasy sports betting law was unconstitutional since chance played a material part in the activity. The state appealed, sending the case to the Court of Appeals in October. In that hearing, many justices likened online spots gambling to games of chance like poker and seemed to favor invalidating the five-year-old law.
The court ordered another hearing about a week later. Though it did not offer any explanation for doing so, it may have been that the six-judge panel was split on how to rule. Judge Michael Garcia has recused himself from the case, and Judge Eugene Fahey — one of the most vocal in favor of voting to overturn the sports betting law — hit mandatory retirement at the end of December.
“When you play poker, if somebody deals you a royal flush you’re donna win the hand,” Fahey said during the hearing in October. “It’s the luck of the draw, just like it’s the luck of the draw in poker, and it’s hard for me to see any rational distinction between the two.”
During today’s hearing, the split seemed, once again, to favor the anti-sports betting side, but the players have changed. Garcia remains recused, and in his stead was Presiding Judge Hector LaSalle. In place of Fahey was the newly appointed Judge Shirley Troutman. With a seven-judge roster, there will be no split this time.
The arguments for both sides remained mostly the same. Senior Assistant Solicitor General Victor Paladino argued that fantasy sports betting is unequivocally a game of skill as “the participants influence if not control the outcome of the contest in which they participate.”
Judges revisited similar analogies to poker and Wall Street markets, though Paladino said that even today both of those are considered more skill-based than chance-based. He noted that fantasy sports participants act as general managers, needing to focus on salary caps, trades, and when to bench players. “This is a simulation, not a duplication,” Paladino said.
Paladino also noted that half the states in the country have recognized fantasy sports betting as skill-based contests, even ones that have constitutional bans on certain types of gambling. “I think the fact this case is being reargued shows it is a close question,” he said.
Attorney Jeffrey Sherrin, representing the anti-gambling citizens, argued that it makes no difference that fantasy sports betting essentially is a simulation. “The fact that you are putting together a team that doesn’t really exist, doesn’t mean it is not sports betting,” he said. “You are still betting on the outcome of those people’s production.”
Paladino encouraged the court meanwhile to defer to the state legislature on the issue, citing 1880s amendments that had exempted insurance and commodities trading and later made other exceptions for chance-affected activities. “That shows that it is a judgment call, and if it’s a close question the tie goes to the legislature,” he argued.
New York is the 18th state to have legalized online sports betting, but some experts believe it will be the leading venue for sports betting based on its citizenry. In January alone, mobile sports betting surpassed $1.6 billion, beating previous records held by Arizona and New Jersey.
Follow @NickRummell
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
California legislative committee approves deepfake bill April 23, 2024 -
