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2 Erie County women among plaintiffs suing state over fantasy sports

When her mother died in a hospital from an acute infection in 2011, Jennifer White of Grand Island learned that her father had used her mother’s bank account to withdraw about $1,100 while gambling at the Seneca Niagara Casino.

That followed about 20 years of her father’s heavy gambling that led to creditors’ phone calls, loan sharks appearing at the family home and cars being repossessed, all resulting in her parents’ divorce.

Over a 10-year period, she has learned, her father piled up more than $500,000 in gambling losses.

White is one of four New York State women suing Gov. Andrew M. Cuomo and the state Gaming Commission over legalization of online daily fantasy sports contests, which they say is just another form of gambling. The lawsuit was filed Wednesday in Albany.

The lawsuit makes two main contentions:

• That fantasy sports contests – where fans bet on the performances of a chosen group of players in football, baseball, hockey or basketball games – are illegal “games of chance,” not legal “games of skill.”

• That state lawmakers and Cuomo exceeded their legal authority and should let New York voters decide whether to legalize these fantasy sports games.

“It’s hilarious to think this isn’t gambling. It’s pretty simple. It’s a game that involves betting. You put up money, and you forfeit the money if you lose,” said Cornelius D. Murray, an Albany lawyer representing the four plaintiffs, including White and Katherine West of Buffalo.

But a spokesman for the two main fantasy sports companies, FanDuel and DraftKings, described defense of the lawsuit as a “layup.”

“The state Constitution specifically gives the Legislature the power to define what is – and what is not – gambling, and the Legislature has done so a number of times in the past and long before the emergence of fantasy sports,” spokesman Marc La Vorgna stated. “The attorney general, who certainly has had some strong opinions about fantasy sports, has clearly stated he will enforce and defend this new law. This is a layup – they have no case.”

All four plaintiffs contend that they have been affected by compulsive gambling problems, either personally or through family members. The Stop Predatory Gambling group is helping them with the lawsuit.

West’s husband, the lawsuit contends, “is a compulsive gambler who ‘maxed out’ the family’s credit cards, overdrew the checking accounts, cleaned out the saving account, invaded the funds set aside for their children’s college fund, all of which directly affected her health.” Those health problems included depression and acute headaches, causing her to miss work and adding to her financial distress while she tired to hide her husband’s problems from their daughters.

So West was forced to take time off from work to search for her husband in casinos, while struggling to cover his debts.

Neither White nor West could be reached to comment Wednesday.

The suit filed in State Supreme Court in Albany seeks a declaratory judgment to end the contests offered by companies such as DraftKings and FanDuel, which claim more than a million New York customers. The plaintiffs seek both a judgment finding the contests in violation of the state Constitution and then a permanent order halting the state Gaming Commission and other state officials from further allowing the sports contests.

Legislation declaring the daily fantasy sports contests legal “games of skill,” instead of illegal “games of chance,” won Legislature approval in June, in the middle of the night during the 2016 session’s last hours.

Cuomo signed the bill in August, saying it offered previously unavailable consumer protections, along with an estimated $4 million in tax money for Albany from the industry. Cuomo’s Gaming Commission in September then issued conditional licenses that allowed the contests to resume.

“This law doesn’t improve the lives of New Yorkers,” said Les Bernal, national director of the Washington, D.C.-based Stop Predatory Gambling. “It wasn’t driven by a grass-roots movement of citizens. It was driven by very powerful gambling interests trying to sneak internet gambling into every home and onto every smartphone in the state.’’

The plaintiffs in the new litigation say the Legislature and Cuomo acted illegally and should have followed the path taken in 2012 and 2013 when they went through the constitutional amendment process to permit the legalization of up to seven new casinos in New York. A change in the state Constitution requires passage in two separately elected legislative sessions, followed by a statewide referendum.

The state Constitution specifically prohibits gambling, with specific exceptions for the state’s own lottery, parimutuel wagering, certain charitable games and the new seven-casino provision.

“The Legislature can’t unilaterally amend the Constitution,” said Murray, the plaintiffs’ lawyer who has been involved in other high-profile gambling-related cases over the last couple of decades.

But the two companies vehemently disagree.

“The Constitution does not define gambling,” their spokesman stated. “Instead, the Constitution specifically directs the Legislature to decide what falls within the definition of gambling.”

The industry contends that the daily contests are legal games of skill because they require careful study of statistical information to determine which players to pick for their fantasy teams. But Murray said a range of external forces – from weather to injuries – sharply reduces that claim of skill.

The sports contests, played by more than a million New Yorkers who pay fees on the performance of players in these pro games, were targeted last year by state Attorney General Eric T. Schneiderman. He ordered the two biggest companies – Boston-based DraftKings and Manhattan-based FanDuel – to shut down what he said were illegal gambling centers promoted by teases of big payoffs.

“Daily fantasy sports is neither victimless nor harmless,” Schneiderman said last November.

The sides wrangled for several months, which included periods of shutdowns by some fantasy sports companies. In March, DraftKings and FanDuel, which control 95 percent of the market, struck a deal with Schneiderman allowing the state to put its lawsuit against the companies on hold. That gave the companies time during the spring’s legislative session to try to persuade lawmakers to carve out a specific legal exemption for their contests. That move proved successful after the hiring of an army of well-connected lobbyists to work the Governor’s office, State Senate and Assembly.

The games were turned back on in September – in time for the industry’s busiest and most lucrative period: professional football season.

The new litigation comes after the main trade group that fought the daily fantasy sports legalization effort in August said it would not litigate the issue. The New York Gaming Association, which represents racetrack-based casino operators, said it was time to move on to other issues.

But the Stop Predatory Gambling group has been raising money for several months to challenge the fantasy sports law. Bernal said the companies offering the daily contests are targeting younger people not attracted to bricks-and-mortar type gambling at casinos.

“The intent is to get a whole new generation hooked on gambling,” he said.

Bernal also points to a Siena Research Institute poll in May that found 45 percent of New Yorkers opposing the daily contests, with 37 percent in support.

“The reasons why every New Yorker should care about this, regardless of whether they gamble or not, is this form of gambling is fleecing New Yorkers,” Bernal said.

At an Albany Law School forum in August, State Sen. John J. Bonacic, R-Mount Hope, told a group of gambling industry lawyers, lobbyists and others that the legislation was crafted specifically to stand up to legal challenges such as those being brought with the new lawsuit. Bonacic, sponsor of the measure in the Senate, said the industry was involved in writing the legislation.

“They were satisfied that what we were doing would meet the constitutional challenge,” Bonacic said at the time.

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