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DraftKings Defends Its New York Operations

DraftKings, whose fantasy sports operation is under fire in New York, filed a brief in the state's Supreme Court Tuesday explaining why the court should deny the attorney general's request for a preliminary injunction that would block New York residents from participating in the fantasy games.

DraftKings, which has hired super lawyer David Boies as counsel, offered evidence from various academics who said that online daily fantasy sports competitions were not illegal online gambling but "complex games of skill," and that entry fees were not wagers.

Boies and partner Jonathan Schiller, also on DraftKing's legal team, are experienced in sports-related issues, having represented the NFL in antitrust litigation, as well as NBA players in a collective bargaining suit.

DraftKings said its key points in the brief were that:

1. "The NYAG seeks to declare DFS illegal gambling by relying on a conclusory expression of 'concern' for consumer welfare, with no support from any statistical analysis or studies. 

2. "New Yorkers have been playing daily fantasy sports legally for nearly ten years.  The Attorney General is not entitled to unilaterally change the law.  Any change in the law should come from the Legislature, not the Attorney General.

3. "For an activity to meet the legal definition of gambling under New York law, players must 'stake or risk' something of value on the outcome of a contest or future event. DFS participants pay an entry fee to compete for fixed prizes.  No court interpreting New York law or a similar statute has held that the paying of such an entry fee constitutes 'staking or risking' the amount of that fee.

4."For an activity to be illegal gambling in New York, the contest or event must be one that is a 'contest of chance' and an event not subject to the 'control or influence' of the player. The undisputed evidence confirms that DFS competitions are contests requiring great skill and knowledge in which chance is not a material element in the outcome.

5. "There is overwhelming, undisputed evidence that DraftKings’ contests are complex games of skill..."

After New York attorney general Eric Schneiderman told DraftKings and FanDuel to stop taking "bets" from New York residents, Rep. Chris Collins of New York, a member of the House Energy & Commerce Committee, called it a draconian decision only meant to grab newspaper headlines and DraftKings pledged to take legal action to keep the state from shutting down its operations there.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.