Daily Fantasy Sports Goes To Court In New York: Here’s What We Learned

November 28, 2015
Daily Fantasy Sports Goes To Court In New York: Here’s What We Learned

On the day before Thanksgiving, lawyers for DraftKings and FanDuel, along with a lawyer from the New York Attorney General’s office met in the courtroom of Judge Manuel Mendez to debate the legality of daily fantasy sports in the Empire State.

The hearing was not meant to be the final word on the legality of DFS, but rather the opening salvo; a first step on what will likely be a very long journey.

That being said, the oral arguments offered by both sides on Wednesday weren’t insignificant, they were a critical first step, as they (along with submitted briefs) will determine if Judge Mendez grants the Attorney General Eric Schneiderman’s injunction that would shut down the two sites in New York until the case is resolved.

The attorneys that spoke were:

  • Kathleen McGee, chief of the attorney general’s Internet bureau, for the state
  • John Kiernan, for FanDuel
  • David Boies and Randy Mastro, for DraftKings

Unfortunately, the hearing concluded without a decision, as Judge Mendez indicated he would rule on the case “soon,” which attorney Daniel Wallach expects to be in the one to two weeks range.

Even more unfortunate for those of us following the case very closely, it was hard to get a read on which way the judge was leaning, although Wallach feels DraftKings and FanDuel did enough to stave off a preliminary injunction.

Questions, where are the questions?

Going into the hearing, pundits, lawyers and reporters following the story expected the judge to fire off a number of questions at all parties, and in doing so, perhaps tip his hand as to which way he was leaning, and which points he felt were flimsy or airtight. However, during the two-hour hearingm Judge Mendez asked only two questions, and one of those questions was more a declarative statement than a real query.

This was quite unexpected, as attorney Daniel Wallach (who manned the Legal Sports Report Twitter account during the hearing) expected a flurry of questions, and was already starting to get antsy when 15 minutes went by without a question from the bench:

Some 30 minutes later (and still no questions) Wallach summed up how difficult it would be to gauge how the judge was leaning without questions:

The two questions highlighted the fundamental flaws with both sides arguments, and seem to be the pivotal issues that may decide the case.

The first question (which was the statement), was directed at FanDuel attorney John Kiernan, when  Judge Mendez cut short one of his trains of thought to opine that the state isn’t arguing the skill of DFS participants or contests, but rather that they are relying the skill of others (athletes) to play the games:

This statement was widely seen as the judge being sympathetic to the attorney general’s point of view.

If the first question scored points for the AG, then the second question scored just as many points for the DFS industry. Judge Mendez’s second question (or first, depending on how you look at it), gave the attorney general’s office a chance to square a circle that has left many people scratching their heads, and a point DraftKings attorney David Boies brought up in his own arguments:

During her rebuttal, attorney Kathleen McGee was asked by Judge Mendez to offer up the attorney general’s rationale for separating daily fantasy sports from season long fantasy sports. Unsurprisingly, she was unable to square that circle.

Key takeaways

Going forward it appears that the two questions/statements made by Judge Mendez will be the key elements of the case:

  1. When you participate in a daily fantasy sports contest, is the future contingent event entering the lineup or the real-world games?
  2. Is there a fundamental difference between DFS and season-long fantasy sports?

And if you’re curious as to how big this case is getting, and what kind of attention it’s garnering, there was a demonstration of just how big it has become, considering the courtroom was jam-packed and the lobbying continued on the courthouse steps… for a daily fantasy sports case:

For those of you interested in a blow-by-blow recap of what transpired in the courtroom, both Wallach (via the Legal Sports Report Twitter account) and USLaw.com live tweeted from courtroom.

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