Gov. Andrew Cuomo said daily fantasy sports had proven to be popular with the people of New York.
New York Governor Andrew Cuomo signed a daily fantasy sports bill into law on Wednesday. The bill allows daily fantasy sports operators like Draftkings and FanDuel to offers their services to New York DFS players without the fear of prosecution.
The bill gives the New York State Gaming Commission the authority to regulate the DFS industry, including consumer protection policies, licensing of operators, and enforcement of policies.
Gov. Andrew Cuomo’s Statement
After signing the bill, Gov. Cuomo said sites like DraftKings and FanDuel are popular in the state of New York. Until now, they have been operated under no regulatory supervision and no protections for customers. Now, those safeguards exists.
The bill is in response to the actions of New York Attorney General Eric Schneiderman. In November 2015, Schneiderman sent a letter to FanDuel and DraftKings, suggesting they were operating illegally in New York. At the same time, Schneiderman sent them a 5-day cease-and-desist order.
New York Supreme Court Decision
The two biggest DFS operators each filed a separate lawsuit, almost immediately. The case went before a New York Supreme Court judge, who declined to dismiss Schneiderman’s case against the DFS operators, but stated they could continue to service New York DFS contestants until a court decision was made.
By December 2015, a date was set for that hearing: May 2016. Eric Schneiderman wanted to force a settlement, so in mid-December 2015, he added a new provision to his lawsuit against FanDuel and Draftkings. He called for the company’s to pay back all New Yorkers who lost money on their sites over the years, as well as $5000 per customer.
Prelude to a Bill
FanDuel and DraftKings denounced the move, but it had the proper effect. By January 2016, the companies came to an agreement with Schneiderman. They would agree to binding arbitration before a judge in September 2016, if they could not get a DFS bill passed by the time the case went to court. Thus, Draftkings and FanDuel had all spring and summer to lobby the New York State Legislature to pass a DFS bill.
State Senator John Bonacic and State Representative Gary Pretlow (Chairman of Assembly Racing and Wagering Committee) sponsored the daily fantasy sports bill in their respective houses of the legislature. Bonacic and Pretlow have been staunch supporters of the gaming industry over the years.
FanDuel Statement on DFS Legislation
FanDuel CEO Nigel Eccles released a statement upon hearing the news. Eccles praised Pretlow, Bonacic, Cuomo, and other key figures, saying, “On behalf of more than three million fantasy players across the state and our entire company, we want to sincerely thank Governor Cuomo and members of the state legislature — led by bill sponsors Senator John Bonacic, Assemblyman Gary Pretlow, Senate Majority Leader John Flanagan and Speaker Carl Heastie — for bringing fantasy sports back to New York.”
The daily fantasy sports industry is expected to generate $4 million in tax revenues per year for the state of New York. New Yorkers represented abut 10% of the revenue stream for the two DFS operators, so it is a major boon for them to continue operating in the state.
The two companies had wanted to service New York fantasy sports enthusiasts without admitting that their form of gaming is “gambling“. The New York DFS bill allows them to do so, at the price of taxation.
DraftKings Statement on DFS Bill
DraftKings CEO Jason Robins also gave his thanks to the many in New York State who helped make the bill possible.
Robins said, “We are thrilled Governor Cuomo has signed the fantasy sports bill and we thank him for his support of this important legislation. We are excited to have our DraftKings contests return to New York and bring the fun and excitement of DFS back to our fans. We would like to thank our hundreds of thousands of New York supporters for their passion and loyalty over the past several months. Your hard work and efforts have made an incredible difference.”
New York becomes the 8th U.S. state to legalize and regulate daily fantasy sports. Illinois and Texas are among several states which have banned DFS gaming. In those states, the state attorney general banned the practice, much like Eric Schneiderman, thus requiring the state legislatures to pass a law to make the practice legal again.
Illinois is expected to pass such a law eventually, while Texas is unlikely to do so.
