Court permits fantasy sports in New York amid appeal process

NEW YORK (AP) – Daily fantasy sports sites DraftKings and FanDuel can continue operating in New York as they appeal a judge’s order that they stop play in the state, a panel of appellate court judges ruled Monday.

The decision by the state Supreme Court Appellate Division in Manhattan comes exactly a month after just one of the judges on the panel stayed a lower court’s ruling that the companies stop business in New York altogether. That preliminary injunction came after state Attorney General Eric Schneiderman sued them to end their operations, arguing they were operating as illegal gambling operations.

The case will next go before the court during its May term.

“As our litigation continues, we expect an appellate court to see what we have known since the outset: DFS is a game of knowledge and skill, one that builds community and whose competitive spirit has become important to the lives of millions of people,” said David Boies, a lawyer for Boston-based DraftKings.

The ruling is the latest in a legal saga that began in November, when Schneiderman’s office first issued the companies cease-and-desist letters.

Since then, Schneiderman has argued the games are illegal because they are ultimately dependent on factors out of players’ control, such as the weather or even blown calls.

“Having already obtained a preliminary injunction against these companies, we look forward to demonstrating to the appellate division that the trial judge was correct,” said Damien LaVera, Schneiderman’s top spokesman. “DraftKings and FanDuel are indeed operating illegal gambling operations in New York and should be permanently barred from doing business in New York.”

DraftKings and New York-based FanDuel had argued their businesses would be greatly harmed if they weren’t permitted to take New York business during the appeals process. The ruling comes during the NFL playoffs.

The highly popular companies took in a combined $3 billion last year, partnering with sports companies such as ESPN and Major League Baseball. But their aggressive ad campaign ahead of the 2015 NFL season drew the attention of regulators and lawmakers who have questioned their business models in states such as Illinois and Nevada.