Lawyers for daily fantasy companies DraftKings and FanDuel were told Monday that the sites can continue to take business from New York-based customers until their appeal is heard in New York Supreme Court.
An appellate panel sided with the daily fantasy companies and decided to allow the companies to continue to operate, for now, with no changes.
Lawyers also were informed that the full decision would be filed to the court next week.
"We are grateful for the legions of New York fantasy sports players that the permanent stay entered today ensures they can continue to participate in our games here as the case progresses," FanDuel said in a statement. "We are confident that fantasy sports have always operated lawfully in New York, but we do believe that new, common-sense regulations to protect consumers and reflect the evolution and growth of the game are needed. The New York legislature, like many states around the country, is working towards such regulation, and we will work with them to achieve it."
"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," David Boies, counsel to DraftKings, said in a statement. "Our ongoing appeal will make clear that daily fantasy contests require just as much skill as season-long contests, which the Attorney General recognizes as perfectly legal under state law."
On Dec. 11, Justice Manuel Mendez of the New York Supreme Court sided with New York Attorney General Eric Schneiderman, who issued an opinion that daily fantasy companies, as structured, were illegal gambling businesses as defined by state law. Mendez's decision would have forced DraftKings and FanDuel to stop taking business from New York customers while the legal proceedings continued. But hours later, upon appeal, the two businesses were granted an emergency stay to remain open within the state through at least the end of 2015.
Monday's news of a permanent stay means the companies can remain open through the appeal in Mendez's court, which will be heard in May. The decision by the appellate panel is independent of the full case before the Supreme Court.
"Having already obtained a preliminary injunction against these companies, we look forward to demonstrating to the appellate division that the trial judge was correct," the attorney general's office said in a statement. "DraftKings and FanDuel are indeed operating illegal gambling operations in New York and should be permanently barred from doing business in New York."
"Our ongoing appeal will make clear that daily fantasy contests require just as much skill as season-long contests, which the Attorney General recognizes as perfectly legal under state law."David Boies, counsel to DraftKings, after a New York appellate court granted a permanent stay to daily fantasy games in the state
Schneiderman amended his case against the companies on Dec. 31, not only requesting that the business stop taking business from New Yorkers but also asking the companies to return money to losing players. Schneiderman further bolstered his claims that the companies were fraudulently advertising first-time deposit bonuses.
The case might never reach a final decision before New York passes a bill to clarify daily fantasy's legal status in the state. New York Assemblyman Dean Murray, a Republican, has introduced two bills involving daily fantasy games.
Assembly Bill A08588 would remove daily fantasy from being considered a game of chance under New York penal law, while Assembly Bill A08587 would amend an article in the state's constitution and could require the federal prohibition on sports betting, the Professional and Amateur Sports Protection Act, to be amended or repealed.
The New York Legislature convenes in mid-January.
"Today's ruling is a strong message that the court doesn't agree that daily fantasy is illegal gambling," Murray said. "If they did, I think they would have shut it down."
DraftKings and FanDuel also are in a legal battle with Illinois Attorney General Lisa Madigan, who in December declared that daily fantasy sports violates state gambling law. California, Texas and Florida are among approximately a dozen states taking a closer look at daily fantasy sports.
Massachusetts will hold a hearing Tuesday to discuss proposed regulation of the games.