Nellie Drew has seen an evolution in professional sports.
As outside counsel for the NHL and as team attorney for the league’s Buffalo Sabres in the 1990s, she remembers all too well when the professional sports leagues viewed gambling as the enemy.
More recently, as a University at Buffalo sports law professor, she has watched the leagues come full circle, supporting the growth of daily fantasy sports.
Recent legal developments have left the question of future “growth” up in the air. On December 10, New York State Supreme Court Judge Manuel Mendez granted Attorney General Eric Schneiderman’s request to enjoin and restrain DraftKings and FanDuel from conducting business in the state. DraftKings and FanDuel immediately filed for a stay of the decision with a New York Appellate Court, and that motion was granted — allowing them to continue operating in New York until at least January 4, 2016, at which time both parties’ briefs will be fully submitted.
In an interview, Professor Drew offered her perspective on this development.
How surprised were you that the appeals court issued a stay?
“This is highly, highly unusual. This has to point to the fantasy side’s ability to show irreparable harm, and therefore they will be allowed to operate pending a full hearing. This certainly doesn’t happen every day. It is highly unusual and I would say reflects the stakes of the industry and the caliber of their legal counsel to be able to pull this off.”
What impact will the ruling have?
“People in New York can now play. But here’s the catch — payments go through payment processors, and they may have their own legal issues with this. Their counsel may not be comfortable accepting payments for processing because they may not be confident they will end up winning this case. So, legally, right now, people in New York are not bared from playing, but payment processors might not be comfortable, so it might not matter. This is certainly a wild ride.”
Why do you think the appeals court issued the stay?
“This had to do with the amount of money at stake. The idea of irreparable harm to the companies that won’t be able to be made up after the fact.”
If the AG gets his way, what will it mean for players in New York?
“New Yorkers are still going to be able to play if they leave the state, much like I can go to Las Vegas, gamble, and return with my winnings. But things are going to get extremely messy. These are set up as accounts and those accounts require a residency, so there’s your problem. Even if you travel to Pennsylvania, let’s say, if your account is linked to a New York address, you won’t be able to play under that address even in a different state. So it is going to get extremely messy, extremely quickly.
“There is going to have to be ongoing regulation because the legislature cannot keep up with all the different scenarios that are bound to arise. For example, if someone goes to school in a state where it is legal and has their account under their school address, then comes home to New York and wants to play, technically that is illegal, but their account would still work. How do you regulate that? There’s the problem. Good luck regulating that. They are probably going to play anyway. How do you determine which law applies at which time. It is a horrific mess.”
What steps must the industry take to survive?
“If I were counsel to the fantasy side right now I would be actively pursuing legislative alternatives, something along the lines where the state legislature could legalize them under certain conditions. Then the litigation may become somewhat irrelevant, But I don’t seem them winning this case and in the interim. In the interim, they are losing major money.
“The fantasy side has a better shot becoming legal in a scenario, for example, where they would pay taxes, than they would have being successful in court.”
