The country’s top daily fantasy sports companies can continue to run their cash contests in New York while they appeal a lower court’s order to shut the games down under the state’s anti-gambling laws.
Appeals-court judges in New York agreed Monday to let DraftKings Inc. and FanDuel offer their games in that state during the appeal.
The decision gives DraftKings Inc. and FanDuel Inc. another critical reprieve in their legal battle with New York Attorney General Eric Schneiderman, who sued the companies in November.
The full appeal won’t be heard until at least May. That likely means daily fantasy sports will continue to operate in the lucrative New York market not only during the NFL playoffs, but possibly through the summer, DraftKings lawyers said.
“The hundreds of thousands of New Yorkers who love daily fantasy sports can continue to enjoy these contests that they love,” DraftKings lawyer Randy Mastro said.
DraftKings has said that players in New York spent about $100 million on entry fees for its contests last year.
In his lawsuit, Schneiderman argued that fantasy sports contests played for money are illegal under New York’s strict ban on gambling. DraftKings and FanDuel counter that their games should be permitted under exceptions for contests determined by a player’s skill.
Schneiderman’s office did not immediately return messages seeking comment on the court ruling Monday afternoon.
The New York legal fight is the most serious of several regulatory pitfalls that have slowed the fast-growing daily fantasy sports industry in the past few months.
DraftKings and FanDuel pulled out of Nevada last year after that state’s gambling regulators insisted the companies get a gambling license. The companies also are fighting a December legal opinion from Illinois’ attorney general finding that daily fantasy sports violate state gambling laws.
Massachusetts Attorney General Maura Healey has said daily fantasy sports contests are not clearly addressed in state gambling law. She has proposed a series of consumer protection regulations, including a ban on players under 21 and restrictions on how the companies may advertise their games.
Mastro added that the pause in court activity could give the New York Legislature time to consider bills that would regulate daily fantasy sports.
“They’ll have an opportunity to take this issue up in earnest,” he said. “And these types of questions have typically been addressed by the Legislature.”