At last week’s New York Supreme Court hearing involving DraftKings, daily fantasy sports and the state attorney general, the most important person in the room was also the most guarded. Though it’s not uncommon for a judge to remain emotionless, New York Justice Manuel Mendez chose a dramatic moment to keep his opinions to himself.
Ruling on New York Attorney General Eric Schneiderman’s motion to get a preliminary injunction banning daily fantasy sports in the state for the short term, Justice Mendez concluded the hearing by saying he’d reached “no decision.” It was fitting, considering he appeared to be unconvinced of either side during the afternoon court battle.
“Justice Mendez gave away very little during oral argument,” explained legal expert Daniel Wallach, who was on hand for the Wednesday hearing, in an email. “He asked only two questions in just a shade under two hours. Not exactly a ‘hot bench.’ But, nonetheless, the few comments that he did make were very telling.”
After remaining silent for the entirety of the assistant attorney general’s opening period, Justice Mendez spoke up in a worrying moment for daily fantasy advocates.
He sharply questioned…the rationale for the AG’s distinction between DFS contests and season-long leagues.
“He suggested to the DFS lawyers that the ‘skill’ of the DFS players only goes so far, that ultimately they are relying on the skill of the real-world players and not just their own skill,” Wallach noted. “This could be seen as supporting the AG’s position that DFS is gambling under New York law because DFS players lack the ability to ‘control’ or ‘influence’ the outcome of the real-word sporting events.”
Of course, Justice Mendez then waited for the attorney general’s office to offer a rebuttal before speaking again. This time, he offered a possibly positive note for the fantasy industry in its fight.
“He sharply questioned…the rationale for the AG’s distinction between DFS contests and season-long leagues” Wallach wrote.
In other words, the dialogue suggests a measure of doubt in how the judge views the New York attorney general’s case.
In regards to the most compelling argument made by each side, Wallach highlighted this for daily fantasy:
David Boies, the lawyer for DraftKings, stressed the extraordinary nature of a preliminary injunction, calling it a “drastic remedy” that requires “a clear right to it” under the law. Boies reminded the judge that a preliminary injunction requires a “really strong factual showing,” particularly since the Attorney General is “trying to upend the status quo” and shut down an entire business in New York. It was an effective way to end his argument, by reminding the judge of the uphill battle that the AG faces in securing such extraordinary relief without a trial.
And for the attorney general, highlighting New York’s broad definition of what constitutes gambling was seen by Wallach as a smart move. Yet the most effective attorney general tactic was actually even bolder than that:
But, in my view, the AG’s best argument —and the one most susceptible to relief by way of a preliminary injunction—is that the definition of “gambling” under New York law does not even depend on the amount of “chance” relative to “skill,” that under the New York definition, illegal gambling also exists when a person stakes or risks something of value upon “a future contingent event” not under “control” or “influence.” Under this definition, it does not matter how much chance or skill is required. The focus is solely on whether the DFS player can “control” or “influence” the outcome of the “future contingent event.”
Ultimately, fate of the attorney general’s requested preliminary injunction (as well as the short term legality of daily fantasy sports in New York) will come down to how the judge interprets a vital distinction.
“The key issue though is whether the ‘future contingent event’ is the DFS contest or the underlying real-world sporting events on which the scoring is based,” Wallach reasoned. “If Justice Mendez concludes that it is the former, he will likely deny the AG’s motion. But if the judge believes that the ‘future contingent event’ is the underlying game or games on which the scoring is predicated, he may very well issue a preliminary injunction to the AG.”
For those curious, the court’s ruling could come at virtually any moment, since Justice Mendez noted at the end of the hearing that his decision will “come very soon.”
DraftKings NY Court Transcript 11.25
