Big Win For Fantasy Sports; Dissent Is “Shocked, Shocked”
The New York Court of Appeals has held that interactive fantasy sports is not “gambling” subject to regulation
we clarify that the historic prohibition on “gambling” in article I, § 9 does not encompass skill-based competitions in which participants who exercise substantial influence over the outcome of the contest are awarded predetermined fixed prizes by a neutral operator. Because ample support exists for the legislature’s determination that the IFS contests authorized in article 14 are properly characterized as lawful skill-based competitions for prizes under our precedent, plaintiffs have not met their burden to demonstrate beyond a reasonable doubt that article 14 is unconstitutional.
Key
Turning to the controversy here, the legislature’s factual determination that IFS contests are a game of “skill,” not of “chance” (Racing, Pari-Mutuel Wagering and Breeding Law § 1401 [8])—and therefore are not “gambling”—has resounding support. Evidence presented to the legislature indicated that outcomes in IFS contests are predominantly based on skill. Studies showed that skilled players achieve significantly more success in IFS contests and that rosters of skilled human players were more successful in IFS contests than randomly generated lineups over 80% of the time. Through a statistical analytic report quoted at the public legislative hearing, an expert opined that IFS games “have an inherent and vast character of skill where chance is overwhelmingly immaterial in the probability of winning” and winning a prize in such contests “strongly depends more on skill than on chance.” In fact, it is now “widely recognized” that IFS contests are predominately skill-based competitions (Dew-Becker v Wu, 2020 IL 124472, ¶ 26, 178 NE3d at 1040-1041 [2020])
WILSON, J. (dissenting):
Since 1894, New York’s Constitution has prohibited “lotter[ies] . . . poolselling, bookmaking, or any other kind of gambling.” Everyone knows that sports betting is gambling. Betting on how many touchdowns a particular player will score is gambling.
The defendants here agree. Aggregating several bets involving different players into a point total that is pitted against point totals of other bettors does not transform gambling into something else. The majority’s explanation of why something everyone knows is gambling is not actually gambling brings to mind a brief exchange in Casablanca:
Captain Renault: This café is closed until further notice. Clear the room at once!
Rick: How can you close me up? On what grounds?
Captain Renault: I’m shocked, shocked to find that gambling is going on in here!
[A croupier hands Captain Renault a pile of money.]
Croupier: Your winnings, sir.
Captain Renault: Oh, thank you, very much.
Perhaps the majority is right that gambling does not today carry the same moral approbation it did in 1894; perhaps the plaintiffs are right that gambling addiction is a more severe problem now than then. Perhaps both are right. Those policy questions are immaterial here. Were there no constitutional prohibition on gambling, that policy dispute could be resolved through the legislative process. But because our Constitution prohibits any kind of gambling, the policy issues must be put to the voters of this state, in the form of a popular referendum to amend the Constitution (or via a constitutional convention). The Constitution was amended by popular vote to legalize horse racing; to allow charities to conduct raffles and other forms of gambling; to allow the state to run a lottery; and to allow the operation of up to seven casinos within the state. The great damage done by today’s decision is not the legalization of gambling (which has existed, in an illegal but mildly tolerated form throughout the state’s history), but the affront to the importance of our Constitution and the role of the courts—in particular this Court—in upholding the Constitution and defending it from ordinary legislative incursion.
(Mike Frisch)