Will New York decide Future of Daily Fantasy Sports?

The daily fantasy sports (DFS) industry has recently experienced some legal troubles, most notably in Nevada and New York. Both states have asked industry leaders DraftKings and FanDuel to stop operating within their borders. The sites complied with Nevada, which is a much smaller state; however, a legal battle is still raging in New York.

Not long ago, New York Attorney General Eric Schneiderman sent cease-and-desist letters to DraftKings and FanDuel. The latter has since stopped taking deposits from New Yorkers, but DraftKings continues to operate in the state until an official legal resolution has been determined.

New York Supreme Court judge Manuel Mendez slapped the two DFS giants with a temporary restraining order within the state. However, New York Appeals Court Judge Paul Feinman granted both sites a temporary reprieve that allows them to do business in New York until Jan 4, when the case will be reviewed by a panel of judges.

While we wait for this to happen, a recent Forbes column asks if New York will eventually decide the future of the DFS industry. Maury Brown wonders if DraftKings and FanDuel were to lose in New York, would it would start the demise of the entire industry around America? Here’s one excerpt from Brown’s article:

“Maybe the best way to describe fantasy sports with entry fees is this way: the New York case has the capacity to set into motion the death of the industry. Sure, it will be around in one form or another, but the industry as we know it today will cease to exist. State after State will become involved, and fantasy sports will be played, just not for cash prizes.

“If DraftKings and FanDuel lose on appeal, it is likely that fantasy sports will be dead, it’s just that the body won’t know it. DraftKings and FanDuel have 30 days in which to file their appeal in the New York State case. Just how many other lawsuits will surface now that there is not only blood in the water, the daily fantasy sports industry is hemorrhaging at a rate that could have the industry bleed to death in short order.”

Obviously there’s still a lot that has to play out for any of this to become reality; in fact, the New York case still seems far from being over with. However, if DraftKings and FanDuel are forced out of New York, it will likely take years waiting on the regulation/legalization process before we see DFS in the Empire State again.