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Fantasy sports contests legal under New York legislation

ALBANY – Daily fantasy sports contests can be legally offered to New York residents under legislation given final approval early Saturday morning at the state Capitol.

The measure was pushed through in the final hours of the 2016 legislative session, and still needs Gov. Andrew Cuomo’s approval for it to take effect.

The legislation comes after Attorney General Eric Schneiderman last year targeted the two largest daily fantasy sports companies – Boston-based DraftKings and Manhattan-based FanDuel – with an order telling them to cease offering illegal games of chance in New York state.

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The Assembly on Friday OK’d the fantasy sports legislation 91-22. The Senate approved the bill at 2:10 a.m. Saturday morning by a 45-17 vote.

“We’re going to regulate it, we’re going to monitor it, we’re going to tax it and we’re going to put consumer protections in place,” said Sen. John Bonacic, an Orange County Republican who sponsored the bill in the Senate.

“You’re going to make a lot of New Yorkers happy,’’ he told lawmakers early Saturday morning.

But the sole senator to speak against the bill – Manhattan Democratic Sen. Liz Krueger – said the state is already saturated with gambling offerings.

“It’s not really in the best interests of the people of New York,” she told her colleagues.

Bonacic told senators that Cuomlo supports the daily fantasy sports bill. The administration has not publicly stated a position on the measure.

Schneiderman, who recently said he stayed out of the talks over the fantasy sports legislation, on Saturday morning signaled that the measure, if signed into law by Cuomo, would clear his legal concerns over the contests. “As I have said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law. Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend,” he said in a written statement.

The state’s top government lawyer, however, made it clear that DraftKings and FanDuel are still in his legal sights. “We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud,” he added.

If Cuomo signs the measure, the bill’s provisions take effect immediately.

The measure attracted only a few minutes of floor discussion, which is unusual for gambling expansion bills. The vote came after a series of closed-door maneuverings that punctured the optimism of opponents – led by in-state casino operators – who believed they had stopped the deal in the Senate.

Using a top-shelf – read expensive – corps of politically wired lobbyists, companies for and against the bill worked the Capitol’s hallways relentlessly the past week.

Critics say the daily fantasy sports violates gambling prohibitions contained in the state Constitution and that its contests increase compulsive gambling.

Supporters insist the games are legal “games of skill” that attract millions of New Yorkers who enjoy putting together fantasy sports teams compiled from professional sports leagues’ players.

Lawmakers supporting the measure believe its passage will end a legal dispute between Schneiderman and DraftKings and FanDuel. That litigation has been on hold, per a deal between the state and the companies, in order to let the Legislature come up with a scheme to declare the contests as legal.

Schneiderman has not commented on the talks that occurred during the past couple weeks.

Constitutional challenge could still be mounted by unknown private groups or individuals if Cuomo signs the legislation.

Proponents say the measure adds new protections for consumers who play the games, requires criminal background checks of operators, and imposes a 15 percent state tax on gross revenues generated within the state from the fantasy sports games.

The legislation states that the contests are legal forms of gambling because they are “based upon the skill and knowledge of the participants.”

Critics say the Legislature overstepped its bounds and that only voters, through an amendment process to the constitution, can allow the fantasy sports contests.

Fantasy sports players made more than more than 100,000 phone calls or sent emails urging lawmakers to back the bill, according to Nigel Eccles, FanDuel’s co-founder.

“Legislators heard them and responded,” he said.

New York becomes the seventh state passing some sort of fantasy sports legalization legislation, the company said. The contests have come under legal fire from a number of states.

Schneiderman last fall harshly criticized the games last year, saying they caused the same kinds of social and economic harms as other forms of gambling.

“Daily fantasy sports is neither victimless nor harmless,” Schneiderman said at the time, saying DraftKings and FanDuel led a “massive, multimillion-dollar scheme intended to evade the law and fleece sports fans across the country.”

New York’s track-based casinos, including one owned by Buffalo’s Delaware North, argued against the fantasy sports legislation. They had been looking to either halt the games or be the operators of the games in the state.

Fantasy sports companies, besides pushing its customers to engage lawmakers, touched all the lobbying bases, including bringing in former Buffalo Bills quarterback Jim Kelly to personally meet with lawmakers to get their votes for the legislation.

email: tprecious@buffnews.com