New York Senate approves fantasy sports, bill goes to governor's desk

ByDavid Purdum ESPN logo
Saturday, June 18, 2016

The future of fantasy sports in New York is in Gov. Andrew Cuomo's hands.

In the final hours of the last day of the legislative session, just after 2 a.m., Saturday, the New York Senate passed a bill, clarifying the legality of fantasy sports and declaring that the games do not constitute gambling under state law.

The bill will now be sent to the governor's desk, likely next week. Cuomo will have 10 days after receiving the bill to sign it into law. Cuomo worked with lawmakers on language in the bill and is expected to sign it. The law becomes effective immediately upon his signature, allowing companies that were offering fantasy contests in New York before November to re-enter the market as early as July 1.

"New York fantasy sports fans rallied -- with more than 100,000 emails and thousands of phone calls to legislators -- and legislators heard them and responded," FanDuel CEO Nigel Eccles said in a statement. "The bill represents a thoughtful legislative process, where bi-partisanship and willingness to compromise carried the day, and we are extremely hopeful Governor Cuomo will sign this bill. We decided long ago to build FanDuel in New York because it's the sports capital of the world and a thriving home for tech startups -- a natural fit for fantasy sports. Our success is due in no small part to the people, infrastructure, partnerships and opportunities here, which very few locations in the world can offer."

The legislative session was scheduled to end Thursday, but it was extended to Friday and lasted into the early hours of Saturday. The State Assembly passed the fantasy sports bill (A10736) 91-22 at 3 p.m., Friday. The Senate followed nearly 11 hours later with a positive vote on S8153, which has identical language to the Assembly bill.

"This was about the fans of [fantasy sports]," New York Assemblyman Gary Pretlow, one of the bill's sponsors, told ESPN.

It wasn't easy, though. Strong opposition, led by the New York Gaming Association, lobbied hard against the bill all the way until vote was taken, and even then the debate continued.

"If it looks like a duck, it swims like a duck, it quacks like a duck, it's a duck," Senator Liz Krueger said in announcing her opposition. "This is another gambling bill."

Cuomo signing the bill would alleviate some of the legal pressure on the two largest daily fantasy operators, DraftKings and FanDuel, who in late March reached a settlement with New York Attorney General Eric Schneiderman to cease operations in New York until legislation was passed.

It's a massive victory for the embattled fantasy industry, overall, pending Cuomo's signature. New York is one of the largest revenue producers for fantasy sports and is viewed as a leading-indicator for other states.

"I would like to thank the leadership of both chambers, especially our bill sponsors, Assemblyman Pretlow and Senator Bonacic, as well as the hundreds of thousands of New York fantasy sports fans who made their voices heard through emails, social media, and phone calls to let their legislators know they love DraftKings and want to see their favorite hobby return to New York," DraftKings CEO Jason Robins said in a statement. "We are grateful for your loyalty and hard work in helping get this bill passed. You made all the difference."

According to research firm Eilers & Krejcik Gaming, New York residents were responsible for $268.3 million in entry fees in 2015, second behind only California. Industry advocate Fantasy for All estimates more than 3 million New Yorkers participate in fantasy sports.

They were delivered a shock on Nov. 11, when Schneiderman issued a cease-and-desist order to the two largest daily fantasy operators, DraftKings and FanDuel. Schneiderman accused the companies of being in violation of state gambling laws. The passing of the bill would eliminate those illegal gambling charges, but the two industry giants still face charges of false advertising and consumer fraud. Court proceedings for those charges are scheduled for September.

"As I have said from the start of my office's investigation into daily fantasy sports, my job is to enforce the law," Schneiderman said in a statement Saturday. "Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend. We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud."

Since October, 10 states have declared the daily fantasy a form of illegal gambling. Nevada ruled that daily fantasy sports meets the definition of a sports pool and would require a gambling license to operate. In addition, DraftKings and FanDuel have been targeted in dozens of class-action suits and are in legal battles with attorneys general in Illinois and Texas.

But other states have taken a different approach. Colorado, Indiana, Missouri, Mississippi and Virginia have passed laws to solidify fantasy sports' legality, and Massachusetts has issued regulations for the industry.

The New York bill requires participants to be 18 years of age and prohibits games on college and high school sports. Employees of fantasy sports operators and athletes and officials who could impact the games the contests are built on are prohibited from playing. The use of third-party computer scripts also is not allowed.

Licensed operators will be subject to a 15-percent tax on gross revenue generated within the state, along with additional regulatory fees and costs. The revenue generated from taxes on the operators' revenue will go to the lottery and included in funds dedicated to education.

"That was some of the heaviest, hardest lobbying I've seen in my time in Albany," New York Assemblyman Dean Murray, a co-sponsor of the bill, said. "I'm thrilled. I think we did the right thing for the millions of fans, for the state of New York, for education. All the way around, I think we did the right thing."

In addition to the New York Gaming Association, the bill faced formal opposition from the Independence Party of New York and the Conservative Party. New York State Assemblyman Andy Goodell, the cousin of NFL commissioner Roger Goodell, also opposed the bill, saying during Friday's vote in the Assembly that fantasy sports is "clearly gambling."

Cuomo, it appears, will have the final word on that.