Recent court ruling puts online sports betting in New York in doubt

ALBANY – Online sports gambling has a questionable future in New York State, facing hurdles in legislation this year. Last week, an appeals court ruled that the state’s daily fantasy sports betting was illegal. The far more lucrative and broader sports betting initiative certainly face even stiffer opposition despite increasing evidence that New Yorkers frequently travel to New Jersey to place bets because that activity is illegal in New York.

 

The Legal Opinions Concerning Online Wagers in New York

 

“I think we have more credibility with our legal arguments because we won the daily fantasy sports case,’’ commented Cornelius Murray. Murray is an Albany-based lawyer who has pursued several legal battles over the last few years against the expansion of gambling in New York. He represented New York residents who were opposed to the legalization of fantasy sports betting.

 

Both supporters and critics of online sports gambling agree that the case concerning daily fantasy sports, involves different legal questions than those that concern mobile sports betting.

 

Last week, a mid-level appeals court decided that the New York State Legislature exceeded its authority in 2016. That’s when the legislature decided that daily fantasy sports are not a type of gambling that is banned by the state constitution. The court’s majority wrote that the State Legislature doesn’t have “unfettered discretion” to decide what is or isn’t considered gambling.

 

According to the court, that power is solely at the discretion of the constitutional amendment process. A constitutional amendment would involve the voters of New York State. And only two weeks ago, New York Governor Andrew Cuomo took what many believe to be a jab at online sports betting with his proposed budget recently which completely ignored online sports betting as a legislative initiative in 2020.

 

Fifteen daily fantasy sports operators, with FanDuel and DraftKings at the forefront, have been licensed since 2016 to offer interactive fantasy sports on phones, computers, and other devices. However, For now, daily fantasy sports betting is still allowed in New York while the case heads to New York State’s Court of Appeals.

 

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Online Sports Betting Will Take the Ultimate Prize

 

The ultimate prize for bettors and the gambling industry is mobile or online sports betting. Right now, sports bets can only be placed in person at the upstate Native American and commercial casinos. While these brick-and-mortar sportsbooks have had mixed results, very few in the business doubt online sports betting would succeed. That’s where the big money is.

 

Considering the immense popularity legalized internet sports betting has seen in New Jersey, amending New York State law to allow internet gambling on both professional and college sports would be very profitable.

 

State Senator Joseph Addabbo, Democrat from Queens, is the sponsor of the online sports betting bill, S17 D, declared in an interview that the recent daily fantasy sports ruling has no bearing to the question of the online sports betting. Addabbo considers comparing the two is like comparing “apples and oranges”.

 

The online sports betting bill requires that the computer servers are house within the state’s licensed casinos, unlike the daily fantasy sports law. The bets would be taken over the internet from gamblers all over New York State, and those bets would be processed within the casinos. Addabbo said that S17 D means the online betting would be made through the servers, which are at the legal casinos, and therefore it is constitutional.

 

Cornelius Murray, the Albany lawyer who had legal DFS betting shut down, pointed out the 2013 law and constitutional amendment permitting new commercial casinos explicitly allowed sports gambling “at” those casinos. “They passed it and at the time, sold it as a way to limit gambling, because they were concerned about the expansion of gambling,’’ Murray pointed out.

 

Addabbo disagreed. “Tha bill was never meant to limit any particular type of betting. It was to limit the sites where casinos could be built, because we didn’t want to inundate New York with brick-and-mortar casinos.” He voted for the 2013 gambling bill and he is currently the chairman of the Senate Committee on Racing, Gaming, and Wagering.

 

Addabbo is of the opinion that placing the computer servers at the site of a licensed casino will settle any constitutional objections concerning wagers being accepted online from anyplace within New York State.

 

However, the state’s Native American tribes are likely to object. Currently, they enjoy casino gambling exclusivity deals with the western part of the state. Unless there is some type of carve-outs for the areas controlled by the tribes, they are likely to oppose any changes to the law.

 

Optimism for S17D

 

Addabbo noted that the in-person sports gambling in New York casinos recently had revenues of $700,000. That is just a tiny fraction of the $25 million New Jersey raked in.

 

The two issues that are making Addabbo optimistic that his sports gambling bill will pass the state’s legislation are New York’s projected $6.1 billion deficit and the detailed discussions he has had with advisers to Governor Cuomo.

 

“We need that revenue desperately. You do not need to settle for a $6 billion deficit,” said Senator Addabbo. Assemblyman Gary Pretlow, Democrat for Westchester, and the S17 D bill’s sponsor in the Assembly, did not have any comments at this time.

 

However, Senator Liz Krueger, a Democrat from Manhattan, and the chair of the Senate Finance Committee, opposed the online sports gambling bill the Senate passed last year, after the Assembly decided not to put the bill on the floor. She said recently that she had not taken a look at the recent court decision to strike down daily fantasy sports betting.

 

“Clearly, that decision should factor into any future actions the state might have to take going forward,’’ said Krueger. For now, daily fantasy sports contests are still allowed in New York while the case heads to New York State’s Court of Appeals.

 

Richard Azzopardi, a senior adviser to Governor Cuomo, said the administration is currently reviewing the recent court ruling. Azzopardi pointed out that one thing that has not changed since 2019, is that the governor thinks that online sports gambling can only be legalized in New York if there is a constitutional amendment. An amendment would require approval by two separate sessions of the Legislature as well as a statewide vote.

 

Citing the issues of paid family leave and medical marijuana, Addabbo pointed out that the Governor has been known to change his opinions as more facts roll in. “We understand that the governor does an analysis process,’’ noted Addabbo.

 

But, the Queens Democrat also pointed out that New York’s financial future needs swift action on sports betting very soon. The process of a constitutional amendment would take at least three years, and Addabbo doesn’t think the state can wait that long.

 

“We can remain on the sidelines, watching other states such as New Jersey, do quite well with online wagers. I don’t think we need a constitutional amendment. Furthermore, I don’t think we should even consider it, given the fact that we desperately need the tax revenue,’’ Addabbo concluded.

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