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NEWS 8 September 2017
New York anti-DFS case set to continue after ruling
By Robert Simmons
A long running legal battle between anti-gambling groups and advocates of daily fantasy sports in New York looks set to continue following the denial of a motion to dismiss a legal challenge to existing laws surrounding daily fantasy sports.

The lawsuit in question was brought by an anti-gambling group following the legalisation and regulation of daily fantasy sports by the state of New York in August 2016. In their lawsuit, filed at the New York State Supreme Court, the group alleged that the law was unconstitutional.

Under the new law, paid entry daily fantasy sports were explicitly defined as games of skill, thereby exempting them from the states existing gambling laws. The crux of the case against the law rests on whether the state legislature can make this determination without changing the state constitution accordingly.

New York Attorney General Eric Schneiderman, who has been acting as primary counsel for the state in the hearings filed a brief in January which stated: “Articles I &9 of the State Constitution expressly delegates to the Legislature the authority to enact appropriate laws to effectuate the constitutional prohibition against “gambling” — a term the Constitution itself leaves undefined.”

“Consistent with that authority, the Legislature has enacted L. 2016 Ch~ 237 (“Ch. 237”), which resolved the legal status of specific internet games known as interactive fantasy sports and declared that such contests properly fall outside the definition of gambling in New York as defined in the Penal Law.”

Schneiderman argued that the lawsuit should be dismissed on this basis, however Albany Judge Gerald Connolly this assertion, stating: “While defendants argue that the legislation is presumed to be constitutional, such presumption alone does not itself bar plaintiffs’ action herein and while plaintiffs ultimately bear the burden of proof in this action, the Court’s analysis upon the instant motion is limited.”

“Plaintiffs complaint challenges the constitutionality of Chapter 237 of the Laws of 201 6. Accepting the facts alleged as true, plaintiffs have alleged that daily fantasy sports constitutes “gambling” and that such activities violate Article I, Section 9 of the Constitution.”

“Defendants [the state] assert that the courts have accorded the Legislature substantial latitude in determining what conduct constitutes prohibited gambling, however, such assertion does not mandate dismissal of plaintiffs’ complaint at this juncture … such argument is more appropriate on a motion for summary judgment and not the instant motion to dismiss for failure to state a cause of action.”

The lawsuit continues.

RELATED TAGS: Land-Based | Legal & Regulatory | Industry
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