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New York’s Unforced Error from I Nelson Rose

Last week I wrote a blog explaining why the plan to issue online sports betting licenses in New York will be a disaster.  Not only will the tax rate be the highest in the nation – possibly a ridiculous 71% – but the entire law is on its face unconstitutional.

In a case involving fantasy sports, trial court judge Gerald Connolly forcefully concluded that the New York Constitution prevents the State Legislature from legalizing any form of sports betting.  Judge Connolly focused on the Constitution’s prohibition on “pool-selling, book-making, or any other kind of gambling.”  He also emphasized that the Constitution required the Legislature to enact laws to outlaw, not legalize gambling. 

On appeal, the Supreme Court Appellate Division agreed.  This Court expressly rejected the attempt by the Legislature to declare fantasy sports as a game of skill and therefore not gambling.  The Opinion held that the test was whether a game’s outcome depends in a material degree upon chance, notwithstanding that skill of the contestants may also be a factor.

The case is now on appeal to the state’s highest court.  In a recent hearing, Justice Eugene Fahy focused on the weird situation created by calling fantasy sports, but not straight-up sports betting, contests of skill.  According to Buffalo’s Spectrum News 1, he said to the state’s attorney, “You’re arguing that I cannot place a bet on whether the Buffalo Bills win their next game, but I can place a bet on whether or not their lead receiver Stefon Diggs catches the ball ten times or six times.”

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