DFS wins one, loses one

FanDuel and DraftKings are in trouble in New York again. While holding that they didn’t violate state penal law, acting Supreme Court Justice Gerald Connolly split the baby by ruling DFS unconstitutional, a big victory for anti-gambling groups that had brought suit against daily fantasy sports. Credit Suisse analyst Cameron McKnight writes that this ruling means “sports betting legislation could be similarly challenged in NY.” Gov. Andrew Cuomo‘s office is still mulling the potential ramifications of Connolly’s ruling and presumably brainstorming an appeal. Plaintiffs’ attorney Cornelius Murray is pressing for an immediate shutdown of all DFS sites in New York State. DraftKings and FanDuel, meanwhile, are conducting business as usual.

“What the judge said is that the law that the Legislature passed purporting to legalize daily fantasy sports was unconstitutional and that daily fantasy sports is definitely gambling,” said Murray. Replied FOB (Friend of Bill) attorney David Boies, representing DraftKings, “We are continuing to study the court’s decision invalidating the regulatory structure and are committed to working with the legislature.” The latter had explicitly legalized DFS, in a bill whose language defined the wagering as a game of skill, not of chance. Connolly predicated his ruling on state laws which forbid “book-selling” and “pool-making.” (Season-long fantasy sports are permitted in the Empire State.) DFS plays a risky game with state laws. Our opinion is that if it quacks like sports betting, walks like sports betting and looks like sports betting it is sports betting. At least Murray’s clients are sufficiently clement to argue not that DFS should be banned but that it requires amending the state constitution via a popular vote. Since they’re likely to lose an election to FanDuel and its ilk, that’s surprisingly big of them.

The New York setback comes fresh upon the heels of an Indiana ruling denying the petition of three ex-college players who sought payment from DFS operators over the use of their names and statistics. (A bit of a shakedown, we think. Had they won the ramifications would surely bankrupt the DFS industry.) While it is premature to say that “extract fees” won’t raise their ugly head elsewhere, the Indiana case — and a similar federal ruling — provides useful precedent. The trio of gridders complained that citation of their statistics was tantamount to use of their names and likenesses without permission. The court was not persuaded”because the use falls within the meaning of ‘material that has newsworthy value,’ an exception under the statute.”

R. Stanton Dodge, DraftKings’ top legal eagle, said, “sports statistics – and the ability for all fans to freely access them – have always been at the centre of the American sports fan experience.” True that. As a high-ranking American Gaming Association lobbyist added, “This builds on the already extensive jurisprudence concluding facts are not protected under [intellectual property] and/or right of publicity laws … Attempting to use legislatures and the courts to extract fees and direct payments from sports book operators severely undercuts the prospects of success for a legal market that can benefit consumers, operators, leagues and governments alike.”

* Score one against the consumer. Tropicana Las Vegas has instituted “event fees” for parking, to sock it to customers who are attending MGM Resorts International events but taking advantage of the free — if insufficient — parking at MGM instead. “This change does not surprise me at all. I honestly thought they would have instituted it months ago,” sighed Access Vegas founder Ted Newkirk At least the paid parking comes with a $10 voucher for the Trop’s Robert Irvine restaurant. Perhaps Penn National Gaming is looking forward to the completion of Raiders Stadium, to which it will be one of the closest casinos. At least Penn is being sufficiently magnanimous to give non-guests free parking on event-free days. You’ll get no such clemency from MGM, Caesars Entertainment or Wynn Resorts.

* “We are waging a frontal war with the evil entrenched deeply in our society over the years.” Thus spake Albania‘s prime minister, Edi Rama, as his country’s parliament voted to outlaw Internet gambling outright and limit terrestrial gambling to tourist-only venues. Here in America, we’ve seen Sheldon Adelson try and fail to put the i-gaming genie back in the bottle but the Albanian government is actually going to see if it can be done. Rama’s socialist regime has been on a crusade against gambling. “Within five months of his triumph, some 1,300 betting premises had undergone inspections, with many being closed down due to allegations of financial mismanagement,” reports iGamingBusiness.com. It does, however, take a certain degree of superhuman abstemiousness to just eradicate a $150 million/year industry.