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Legal challenge to daily fantasy sports contests gets court hearing

ALBANY – Two years after daily fantasy sports wagering was legalized in New York, lawyers squared off in a state court Wednesday over whether the Legislature and Gov. Andrew M. Cuomo violated the state’s constitutional limitations on gambling.

“The Legislature cannot redefine gambling to include something it’s not," Cornelius Murray, an Albany lawyer representing four plaintiffs associated with an anti-gambling group, told a state judge who is considering the case that seeks to declare the contests illegal.

At issue is whether state officials in 2016 violated New York’s constitutional prohibition against gambling – except several specific kinds of wagering – and overstepped their authority in declaring that daily fantasy sports contests do not violate the state’s penal laws barring wagering on games of chance.

Unlike the 2016 legislative fight, which saw an army of industry executives and lobbyists swarming over the Capitol’s hallway in a multimillion dollar campaign, acting Supreme Court Justice Gerald W. Connolly considered the arguments from Murray and state lawyers in a largely empty courthouse across the street from the Capitol. Connolly spent 40 minutes peppering the attorneys with a variety of legal questions about the case.

The oral arguments were heard shortly before the start of the NFL season, the daily fantasy sports industry’s most lucrative period.

The lawsuit was filed in 2016 against Cuomo and the state’s Gaming Commission. In court Wednesday, the state’s lawyer, Assistant Attorney General Richard Lombardo, told the judge the Legislature had the legal authority to determine that fantasy sports contests are games of skill when it crafted the law that effectively lifted a temporary ban that the state had placed on the industry.

“It is within the discretion of the Legislature to make a policy choice," Lombardo told the judge.

The state is hoping that the judge, bowing to a long line of case law, will defer to the Legislature on matters involving a change in state law. But Murray has said the courts do not abdicate their role when, plaintiffs argue, the state government violated the constitution when it pushed through a bill in the middle of the night at the end of session in 2016 legalizing the fantasy contests.

Murray said the Legislature and governor could have sought to amend the constitution’s gambling prohibition to specifically carve out an exception to daily fantasy sports wagers. The last gambling-related constitutional change came in 2013 when voters statewide authorized up to seven new commercial casinos.

“The constitution belongs to the people, not the Legislature," Murray said in court.

The plaintiffs argue that daily fantasy sports amounts to illegal gambling because it involves elements of chance that relies “to a material degree upon future contingent events,’’ according to legal filings. Those future events involve “real-life athletes in performing in real-life athletic events.’’ Placing bets on the outcome of such contests over which contestants have no control over the athletes violates constitutional provisions adopted in 1894, the plaintiffs argue.

Sponsors of the measure in 2016 said at the time that state lawyers went out of their way to craft legislation in such a way as to make certain it would stand up to an expected challenge in the courts.

Lombardo told the judge that the Legislature is entitled to deference when it expanded the definition of gambling two years ago. Lombardo said the fantasy sports contests include both skill and chance in their outcomes, but that lawmakers have the legal right to determine if the form of wagering violates penal law definitions of illegal gambling.

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