published Oct 29, 2018 6:53:34 PM, by Erik Larson and Christopher Palmeri
(Bloomberg) —

The New York law that legalized online fantasy sports games — allowing FanDuel Inc. and DraftKings Inc. to do business in the state — runs afoul of the state Constitution, a judge ruled.

In an Oct. 26 ruling, state Supreme Court Justice Gerald Connolly in Albany struck down part of the 2016 law in a lawsuit brought by four New Yorkers.

David Boies, outside counsel for DraftKings, said the company was pleased the judge upheld the state’s decision to decriminalize the activity and that it was continuing to review his ruling invalidating the regulatory structure. The company was “committed to working with the legislature,” he said.

FanDuel didn’t comment.

The immediate impact of the decision is unclear. Cornelius Murray, a lawyer for the plaintiffs, said that unless the state appeals the decision it will “stop everybody from conducting” such games.

“They’re going to have to set the law aside and not license daily fantasy sports,” said Murray, who represents four New Yorkers with gambling disorders or relatives of those with such problems.

Spokespersons for New York Governor Andrew Cuomo, Attorney General Barbara Underwood and the state gaming commission either declined to comment or didn’t immediately have a comment.

The 2016 law legalizing fantasy sports gambling came a year after then-Attorney General Eric Schneiderman ordered DraftKings and FanDuel to cease operations for violating the state constitution.

The legalization of online fantasy sports violated the constitution’s ban on gambling because it involves elements of chance based on player’s real-world performance, the judge said. What the law’s proponents should have done is seek to amend the Constitution, he added.

The case is White v. Cuomo, No. 5861-16, New York State Supreme Court, Albany County

–With assistance from Eben Novy-Williams.To contact the reporters on this story: Erik Larson in New York at elarson4@bloomberg.net ;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net Jeffrey D Grocott

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