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Court ruling throws online sports betting push in New York into question

ALBANY – Legalizing online sports gambling in New York State already faced a questionable future in Albany this year.

But after last week’s appeals court ruling declaring illegal the state’s daily fantasy sports betting program, the broader – and far more lucrative – sports gambling initiative could now face even more hardened opposition.

“I think we get a little more credibility with our arguments because we won the (daily fantasy sports) case,’’ said Cornelius Murray, an Albany lawyer who has pursued a number of legal challenges over the years against proliferation of gambling programs in New York. He represented several New York residents opposed to the fantasy sports.

Critics and supporters of online sports wagering agree the case involving daily fantasy sports, or DFS as the industry calls it, involves different legal questions than the ones surrounding mobile sports gambling.

A midlevel appeals court last week said the New York State Legislature overstepped its authority in 2016 when it declared daily fantasy sports is not a form of gambling banned by the state constitution. The court’s majority wrote that the Legislature does not have “unfettered discretion” to say what is, and is not, gambling. That power is reserved to the constitutional amendment process, which involves voters of the state, according to the court.

Fifteen daily fantasy sports companies, led by DraftKings and FanDuel, have been licensed the past four years to offer the interactive fantasy sports contests on computers, phones and other devices.

But the real prize, for the gambling industry and bettors, is online or mobile sports wagering. Currently, sports betting can only be done in person at upstate commercial and Native American casinos. The sportsbook operations have seen mixed results, but few doubt the biggest money – considering just the experience of New Jersey since it legalized internet sports betting – would come from expanding New York State law to allow internet bets on professional and college sports.

Sen. Joseph Addabbo, a Queens Democrat and sponsor of the online sports betting bill, said in an interview Saturday that the daily fantasy sports ruling has “no bearing” on the internet sports gambling matter because the two present “apples and oranges” legal issues.

Unlike the daily fantasy sports law, the online sports betting bill requires that computer servers be based at licensed casinos, which would then take bets – over the internet – from bettors anywhere in New York State. Addabbo said that plan results in the online bet being made at the point of the servers – the casinos – and therefore constitutional.

Murray, the Albany lawyer, said the 2013 law and constitutional amendment that permitted new commercial casinos was explicit in allowing sports gambling “at” those facilities. “They did it and sold it at the time as being one where they were going to limit gambling because they were concerned about the proliferation of gambling,’’ Murray said.

“I completely disagree,’’ said Addabbo, who voted for the 2013 gambling bill and today is the chairman of the Senate Committee on Racing, Gaming and Wagering. “It was never to limit the type of betting. It was to limit the siting (of casinos) because we didn’t want to saturate the state with brick-and-mortar casinos."

Addabbo believes siting computer servers on the grounds of a licensed casino will resolve any constitutional objections about bets being accepted online from anywhere within the state’s borders.

Native American tribes, however, are likely to object unless there are some sort of carve-outs for the large geographic areas of upstate, such as Western New York, where they enjoy casino gambling exclusivity deals with the state.

Addabbo said in-person sports gambling in New York in a recent month saw revenues of $700,000, or a fraction of the $25 million New Jersey realized.

Two things are making Addabbo optimistic that the sports betting bill will pass this session: the state’s projected $6.1 billion deficit and more detailed discussions with advisers to Gov. Andrew M. Cuomo.

“We do need the revenue. You do not cut yourself out of a $6 billion deficit," said the senator.

Assemblyman Gary Pretlow, a Westchester Democrat and the bill’s sponsor in the Assembly, did not return a call seeking comment.

Senator Liz Krueger, a Manhattan Democrat, voted against the online sports betting bill the Senate passed last year after the Assembly rejected putting the issue to the floor. She said Monday that she had not yet reviewed last week’s court decision.

“But, clearly, it should factor into any actions the state might take going forward,’’ said Krueger, the chair of the Senate Finance Committee.

Daily fantasy sports contests, for now, are still being allowed in New York as the case heads to its next and final state court: the Court of Appeals.

The Cuomo administration is also still reviewing the court ruling, Richard Azzopardi, a senior adviser to Cuomo, said on Sunday night.

One thing that has not changed since 2019, Azzopardi said: The governor believes online sports betting can only become legal in New York if the constitution is amended. That would require approval by two separate sessions of the Legislature and then a statewide vote.

Citing medical marijuana and paid family leave issues, Addabbo said Cuomo has been known to change his mind over time.

“We understand this governor does an analysis process,’’ Addabbo said.

But, the Queens Democrat said, New York’s financial picture demands action on sports betting sooner and not three years or so down the road after a constitutional amendment process.

“We can stand on the sidelines and watch other states, like New Jersey, do very well with this. We don’t need a constitutional amendment, nor should we even consider it given the fact that we need the (tax) revenue,’’ he said.

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