A New York appellate court on Thursday ruled that online fantasy sports betting should be considered illegal gambling. It upheld a previous ruling by a lower court, which suggested that a 2016 law allowing fantasy sports betting violates New York State’s constitution.

What did the appellate panel suggest?

According to the appellate panel,

“We recognize that the legislature was sympathetic to and supportive of IFS (interactive fantasy services) participants. Nevertheless, we have rejected the legislature’s explicitly stated basis for the removal of IFS from the Penal Law definitions of gambling.”

However, the decision from the New York State Appellate Division has created a new challenge for the market- related to increasing uncertainty about fantasy sports operators like DraftKings and FanDuel. Both companies aim to operate in the state. Albany officials may take the case to the Court of Appeals, the highest court in the state.

The main point of the contest

In 2016, an amendment to Racing, Pari-Mutuel Wagering and Breeding Law declared that online fantasy sport should not constitute gambling. Therefore, it could be allowed in the state. A group of anti-gambling advocates argued against the law, suggesting that it violated the state constitution.

Later in 2018, Supreme Court Justice Gerald Connolly from Albany agreed with the activities and declared that the 2016 amendment is “null and void.” The state was unhappy with the decision and took the case to the Appellate Division, which upheld the lower court’s orders.

The 2016 law was signed by Gov. Andrew Cuomo, defining fantasy sports as games of chance. The law will require fantasy sports companies to operate in the state by paying $50,000 as an annual fee. The companies will also be required to pay a 15% tax on revenue. The law disallowed underage gambling and prohibited high school and college sports betting as well. The estimated $4 million in revenue to the state from fantasy sports taxes was to be used for education.