On Nov. 11, New York State Attorney General Eric T. Schneiderman issued cease-and-desist letters to daily fantasy sports sites FanDuel and DraftKings stating that the online gambling industry goes against New York State gaming laws.
According to New York Penal Law 225.00 gambling is defined as “a contest of chance,” and/or “a future contingent event not under [a bettor’s] control or influence.” However gaming laws have been amended several times in New York in order to support horse racing, the New York State Lottery, and several casinos.
Though the issue remains a New York problem, the question of the legality of daily fantasy sports continues to arise across the country.
The argument most daily fantasy sports players tend to focus on is that it is a “true contest” and a game of skill. As the commissioner of a season-long fantasy football league for the past seven years, I decided to test how much skill was truly involved with daily sports.
With no prior history in daily fantasy sports, I signed up for two FanDuel football contests in week 12 and set two very different lineups – one based on my knowledge of fantasy sports and another based exclusively on the rankings found on popular daily fantasy sports sites.
In the league based on rankings I only finished 1,020 out of 3000. However in the contest where I used my own knowledge of fantasy, I finished within the top 500 out of 1,400, winning three times my deposit.
Since some may argue that this was based on luck I did the same thing the following week with similar results.
Many daily fantasy sports players have also proven skill is needed to win contests, however, New York Justice Manuel Mendez says that the real question lies in what constitutes “a future contingent event” in which bettors hold no influence.
Alternatively, an argument can be made that within the wording of the law, fantasy sports players do not specifically bet on athletes but instead against other bettors.
Though fantasy relies on the skills of athletes that bettors have no control over, daily fantasy sports and season long fantasy requires bettors to choose players based on their probability and scoring ceiling.
Players cannot be chosen simply by who is best, since salary caps limit who bettors can start, but instead who the individual bettor believes to be the best option available at a low price. These picks are ultimately being tested against the picks of other bettors.
Regardless of where one stands on the argument of how skill plays into winning fantasy contests, the truth is the question of daily fantasy’s legality is entirely based on its taxability.
With New York State gaming tax revenue increasing 43 percent to nearly $2 billion after the opening of the states first legal casino it’s hard to believe that the rest of the country won’t follow suit to increase gaming revenue by demanding a stake in the growing fantasy sports industry.