Governor Andrew Cuomo signed into law a bill to legalize daily fantasy sports in New York. This is the eighth state to legalize daily fantasy sports, and the seventh to do so this year. With the start of the NFL season just around the corner, the timing of this development is especially fortuitous, as daily fantasy sports operators who had run contests in New York prior to November of 2015 may receive temporary permits to continue doing so.
The bill—S8153—legalizes daily fantasy sports through the registration and regulation of “interactive fantasy sports contests,” which the bill defines as “a game of skill wherein one or more contestants compete against each other by using their knowledge and understanding of athletic events and athletes to select and manage rosters of simulated players whose performance directly corresponds with the actual performance of human competitors on sports teams and in sports events.” The bill requires contest operators to apply for registration with the New York State Gaming Commission, and each registrant must pay a 15% tax on gross revenue generated within the state and an additional 0.5% tax not to exceed $50,000. The revenue generated by this tax will go to fund public education through the state’s lottery fund.
Operators must also implement a number of consumer protection measures, such as prohibiting fantasy sports operator employees (and their family members), athletes whose performance may be used to determine the outcome of a contest, and individuals under 18 years of age from participating; requiring operators to make clear and conspicuous statements regarding the chances of winning individual contests; enable participants to exclude themselves from contests; identify all “highly experienced players” in any contest; and limit the number of entries each participant may submit per contest, among others.
This is the latest development in the ongoing legal battle between New York Attorney General Eric Schneiderman and daily fantasy sports operators DraftKings and FanDuel. In March, DraftKings and FanDuel agreed to stop taking bets in the state of New York in exchange for a delay in the initiation of additional litigation until after a September appeals hearing is held on the legality of these contests. In light of this new legislation, that hearing appears moot. However, Attorney General Schneiderman may still move forward with false advertising and consumer fraud claims against both DraftKings and FanDuel.