DraftKings Amended Lawsuit Response 0104

7/21/2019 DraftKings Amended Lawsuit Response 0104

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TABLE

OF

CONTENTS

Pale

PRELIMINARYSTATEMENT

1

STATEMENTOF

FACTS

6

A.

Fantasy

S p o r t s

Are

C o n t e s t s

of

k i l l

6

B.

The

Scoring n

All

Fantasy

S p o r t s

Season

-Long

and

a i l y ) .

Depends

Upon

Two

hings:

The

t h l e t e s

S e l e c t e d

by

h e

Fantasy

C o n t e s t a n t

and h e

Fantasy

o i n t s

Generated by

Those

A t h l e t e s

9

C.

Both

DraftKings

and

Season

-Long

Fantasy

S p o r t s

P r o v i d e r s

Charge

Entry

Fees and

Award Cash

r i z e s

10

PROCEDURALHISTORY

11

A R G U M E N T

12

The

Court

Should

Grant

A

tay

Pending

Appeal

12

I .

DraftKings s

L i k e l y

t o

Succeed on

h e

M e r i t s

13

A.

Daily Fantasy

S p o r t s

C o n t e s t s

Are

Not

: o n t e s t s

of

C h a n c e

15

B.

Daily

Fantasy

S p o r t s

C o n t e s t s Do

ot

Depend

upon a

Future

Contingent

Event Outside

h e

C o n t e s t a n t s

I n f l u e n c e

or

C o n t r o l

:

25

C.

DraftKings

o n t e s t a n t s Do ot

take

o r Risk

Something

of

alue

on

h e

Out come of

aily

Fantasy

S p o r t s

C o n t e s t s

29

I I .

DraftKings

Will

S u f f e r

S u b s t a n t i a l

And

r r e p a r a b l e Harm

Ab se n tA Stay

32

I I I . A

tay

Will Not

r e j u d i c e

or

Harm h e P u b l i c

35

C O N C L U S I O N



TABLE

OF

AUTHORITIES

Pa e

s

CA5ES

35 .Y.C.

o l i c e

O f f i c e r s v .

C i t y

of

New

o r k ,

34 A.D.3d

392 1 s t Dept

006)

13

Broida

.

B a n c r o f t ,

103

A.D.2d

88

2d

Dep t

1984)

36

B u r r i s v .

W h i t e ,

901

N.E.2d 895

I l l . 2009)

24

C i t y

of

ochester

.

S c i b e r r a s ,

55

A.D.Zd 849

4th Dept

976)

1 ,

34

Da

i l v a

v .

Musso,

76

.Y.2d

436

990)

12

DeLury .

C i t y

of

New ork,

48

A.D.2d

405 1 s t

Dept

975)

12

DiFabio

.

Omnipoint

Comc ns,

n c . ,

People

ex e l .

E l l i s o n v .

Lavin,

179

N . Y .

164

1904)

3

Fischer

. D e i t s c h ,

168

A.D.2d

599

2d

Dep t 1990)

13

Four Times

Square

s s o c s . ,

L . L . C .

v .

Cigna

n v s . ,

I n c . ,

306

A.D.2d

1 s t

Dept 003)

34

G r i s i

v .

S h a i n s w i t ,

119

A.D.2d 418

1 s t

Dept

986)

:

12

Heldman .

Douglas,

33

A.D.2d

695

2nd

Dept. 1969)

14

Humphrey .

Viacom, n c . ,

N o . 6

- c v

-2768,2007

W

797648

D.N.J.

une 20,

007)

16,

30,

31,

32

i i



Koultukis

v . P h i l l i p s ,

285

A.D.2d

433

1 s t Dept

001)

13

People

ex r e l .

Lawrence

. Fallon,

4 .D.

82 1st

Dept

896),

f f d ,

152

N.Y.

12

1897)

3, 29

Liparota

v .

United t a t e s ,

.471

U.S.

419

985)

29

N.

. C i t y Off

-Track

e t t i n g

Corp. v . N.

.

Racing

Ass

n , I n c .

250 A.D.Zd

437 1 s t

Dept

998)

35

Nken v .

Holder,

556 U.S.

418 009)

12

Parker

v .

Mobi l

Oil Corp.,

7

.Y.3d

434 2006)

36

People

v .

Golb,

23

N.Y.3d

455

2014)

28

People

v . Li

Ai

H u a ,

24

isc.

3d

1142

Grim.

Ct.

Queens

Co unty 2009)

15,

20

People v .

Smith,

VJ

1V.

~ GU F1

i170̀ t~

..................

...............................

..........

...............................

Russell .

New

York

C i t y

H o u s .

Auth.,

160

Misc. 2d

237

Sup.

Ct.

Bronx

C o un ty

1992)

12

Scotto

v .

Mei,

219

.D.2d

181

(lst Dept

9 9 6)

14

Second

o n

Second

Cafe, n c .

v .

H i n g

Sing

Trading,

n c . ,

66

.D.3d 255

1st Dept

009)

: 33

S k i l l i n g

v .

United

t a t e s ,

561

U.S.

358 010)

28

SportsChannel

Am.

ssocs.

v . Nat l

H o c k e y League,

186

A.D.2d

417

1st

Dept

992)

: 35

i i i



Thomson

. Daisy s

Luncheonette

Corp.,

7 isc.

3d

1019(A),2005

Y

l i p

O p .

50674(U)

S u p .

t .

Kings

Count y2005)

:

13

Tucker .

T o i a ,

54

A.D.2d

322

4th

Dept

976)

14

United or P e a c e

and u s t i c e

v .

Bloomberg,

5 Misc.

3d

845 S u p .

t .

N.Y .

ounty

2004)

13

Weissman

v .

Kubasek,

112 A.D.2d

1086

2d D e p t

1985)

14

W i l l i s

of

New o r k ,

I n c .

v .

DeFelice,

29 9

A.D.2d 240

1 s t

Dept

002)

33

STATUTES

N.Y. enal

Law

§

25.00(1)

:

15

N.Y. enal Law

§

25.00(2)

14,23, 5,

27

RULES

CPLR55 8

12

C P L R 5 5 1 9 ( c )

1 2

C P L R 6 3 1 2 ( b )

3



PRELIMINARY

STATEMENT

The i m i t e d

q u e s t i o n

now

b e f o r e

t h i s

Court s

whether

t

s h o u l d

c o n t i n u e

t h e

emergency s t a y

now

n

p l a c e

f o r t h e

d u r a t i o n

of

h i s

a p p e a l

b e c a u s e ,

o t h e r w i s e ,

D r a f t K i n g s

w i l l

be

f o r c e d

out of

u s i n e s s i n

New

York

b e f o r e

i t s

a p p e a l

i s

h e a r d

on h e

m e r i t s .

For

e a r l y a

e c a d e ,

New

ork

e s i d e n t s

have

e n j o y e d

p l a y i n g

d a i l y

f a n t a s y

s p o r t s

DFS )

o n t e s t s

i t h o u t any s t a t e

o f f i c i a l

e v e r

b e f o r e

s u g g e s t i n g

t h a t

t h e y might

be

i l l e g a l .

Now,

New

ork's

A t t o r n e y

General

NYAG

) ,

a f t e r

y e a r s

of

h a t

o f f i c e ' s s i l e n t

i n d i f f e r e n c e ,

has

d e c i d e d t o t a k e t h e

p o s i t i o n

t h a t

DFS

c o n t e s t s

amount

t o

gambling

under

New

York

law.

But

t h e r e i s

no

r e a s o n

t o

r u s h

t o

judgment

and

s h u t

down

DraftKings

i m m e d i a t e l y ,

b e f o r e

t h i s

Court

a s

t h e

o p p o r t u n i t y t o

c o n s i d e r

t h i s

i m p o r t a n t

a p p e a l

on h e

m e r i t s .

DraftKings

merely

s e e k s t o

m a i n t a i n

t h e

s t a t u s quo

h r o u g h

a

h o r t

e x t e n s i o n

of

h e

i n t e r i m s t a y

t h a t i s

a l r e a d y

i n

p l a c e .

New

York

c o u r t s have

g r a n t e d

s t a y s

pending

a p p e a l

i n

s i m i l a r

c i r c u m s t a n c e s ,

where t h e

p r e l i m i n a r y

i n j u n c t i o n

b e i n g

a p p e a l e d

from

would

s h u t

down

t h e

company's

s t a t e w i d e

o p e r a t i o n s .

S e e ,

e . g . ,

C i t y

of

o c h e s t e r

v

S c i b e r r a s ,

55

A.D.2d 849, 4 9

4 t h

Dept

9 7 6 ) .

In

t h i s

c a s e ,

J u s t i c e

Mendez

e n t e r e d

a


i n j u n c t i o n

w i t h o u t

h o l d i n g

an

e v i d e n t i a r y

h e a r i n g ,

w i t h o u t

t a k i n g

w i t n e s s

t e s t i m o n y ,

and

w i t h o u t

making

c r e d i b i l i t y

f i n d i n g s

—an

approach

t h a t

d i d

not

a f f o r d

D r a f t K i n g s

due

p r o c e s s .

Allowing

h i s


i n j u n c t i o n t o t a k e

e f f e c t

would

immediately



f o r c e

DraftKings

t o

s h u t t e r

i t s

b u s i n e s s i n

New

York,

d e p r i v i n g i t s

375,000

New

Yo rk

customers of

t h e c o n t e s t s

t h e y

l o v e

and

have

been

e n j o y i n g

f o r

y e a r s .

I t

would

c a u s e

DraftKings t o

l o s e

m i l l i o n s

of

d o l l a r s

i n

revenue

w h i l e

i r r e p a r a b l y

harming i t s

r e l a t i o n s h i p s

w i t h

i n v e s t o r s

and

b u s i n e s s

p a r t n e r s

t h a t

have

i n v e s t e d

hundreds

of

i l l i o n s

of

o l l a r s

over

t h e

p a s t

f o u r

y e a r s ,

such a s

Fox

S p o r t s ,

Major

L e a g u e

B a s e b a l l ,

t h e

N a t i o n a l Hockey

League,

h e

New

Yo rk

Yankees,

h e

New

Yo rk Mets,

t h e

New

York

Knicks,

t h e New

Yo rk

G i a n t s a n d

t h e

New

Yo rk

Rangers

r g a n i z a t i o n s

t h a t

have

always

t a k e n

a

s t r o n g s t a n c e

a g a i n s t

g a m b l i n g .

S ee

A f f i d a v i t

of

Timothy

D e n t

D e n t

A f f . ) ¶ 15

( a t t a c h e d t o t h e

F i g u e r e d o

A f f i r m a t i o n

Figueredo

A f f i r m .

)

t

Ex. .

T h e

NYAG

a s

l i t t l e

t o say

i n

r e s p o n s e .

Rather

t h a n i d e n t i f y

t h e

c o n c r e t e

a n d

im m ediate

h a r m s

n e c e s s a r y

t o

s u p p o r t a


i n j u n c t i o n ,

t h e

NYAG

i n s t e a d

r e s o r t s t o

s m e a r

t a c t i c s

a nd

s p e c u l a t i o n ,

s t r e t c h i n g

t o

t i e DFS

o n t e s t s

t o

e v e r y t h i n g

f ro m

c h i l d

abuse

t o

over-

e a t i n g ,

a m o n g o t h e r

t h i n g s .

NYAG

r. 37-

38.

T h e

A t t o r n e y

G e n e r a l ' s

a r m c h a i r

s o c i o l o g y

would

not

p a s s

m u s t e r

on a

daytime

t a l k

show.

DFS

c o n t e s t s

have bee n

o f f e r e d

o p e n l y ,

h o n e s t l y ,

a n d

p e r m i s s i b l y

i n

New York

f o r

n e a r l y

a

d e c a d e ;

and i f

t h e

NYAG

had

a c t u a l

e v i d e n c e

t h a t t h e y

caused

p u b l i c

harm, he

would

have

i d e n t i f i e d

i t i n

h i s

b r i e f . There

i s

none. T h e

absence

of

any

e v i d e n c e

of

u b l i c

h a r m

—l e t

a l o n e

t h e

t y p e

of

i m m i n e n t a nd

s e v e r e

p u b l i c

h a r m

n e c e s s a r y t o

s u p p o r t

t h e

e x t r a o r d i n a r y



remedy of

a


i n j u n c t i o n

—is by

i t s e l f

s u f f i c i e n t r e a s o n

t o

m a i n t a i n

t h e

s t a y

t h a t i s

a l r e a d y

i n

p l a c e

f o r a

h o r t

a d d i t i o n a l

p e r i o d

now

h a t

t h e

p a r t i e s

a r e

i n

agreement

t h a t

D r a f t K i n g s

w i l l

p e r f e c t

t h i s

a p p e a l

f o r

e x p e d i t e d

h e a r i n g

i n t h i s

C o u r t ' s

A p r i l

t e r m .

The

NYAG

s

u n l i k e l y t o

s u c c e e d

on t h e

m e r i t s

of h i s

a p p e a l

b e c a u s e

h i s

p o s i t i o n

r e s t s

on

a

b l a t a n t

m i s r e a d i n g

of h e

gambling

s t a t u t e

t h a t i s

a t

odds

w i t h

t h e way

New

ork

c o u r t s

have

i n t e r p r e t e d

i t

f o r

more

t h a n a

c e n t u r y .

C o n t r a r y

t o

t h e

NYAG s

iew,

c o n t e s t s

l i k e

DFS,

n

which

p a r t i c i p a n t s

pay an

e n t r y f e e

t o

compete

f o r

p u r s e s ,

p r i z e s ,

o r premiums,

do

not

amount

t o

u n l a w f u l

gambling.

People

ex

r e l .

Lawrence v .

Fallon,

4

.D.

82, 88

l s t

Dept

8 9 6 ) ,

a f f ' d ,

152

N.Y.

12 (1897).

This

i s

s e t t l e d

New

ork

law

—which

e x p l a i n s

why,

u n t i l

t h i s

A t t o r n e y

General f o r

whatever

r e a s o n

d e c i d e d

t o

a s s e r t a

c o n t r a r y

view,

not a

s i n g l e

s t a t e

law

enforcement

o f f i c i a l

o r

r e g u l a t o r

had

e v e r

s u g g e s t e d

t h a t

d a i l y

f a n t a s y

s p o r t s

were

l l e g a l .

The

NYAG s

t t e m p t e d

r e w r i t e

of

e n t u r y

- o l d

New

ork law

s

a l s o

e v i d e n t

i n

h i s

r e f u s a l t o

a c c e p t

t h a t t h e

r e l e v a n t

t e s t i s

whether

chance

o r

s k i l l i s t h e

c o n t e s t ' s

dominating

and

c o n t r o l l i n g

f a c t o r .

People

ex

r e l .

E l l i s o n

v .

Lavin, 17 9

N.Y.

164,

17 0

- 7 1

(1904).

Under

t h e

NYAG s

p p r o a c h ,

which

simply

a s k s

whether

t h e

outcome

could

be

a f f e c t e d by

some

element

of chance

o u t s i d e

t h e

c o n t e s t a n t ' s

c o n t r o l ,

l l

s p o r t i n g

e v e n t s ,

and

v i r t u a l l y

any

c o n t e s t

o r

p a s t i m e ,

3



would

be

c r i m i n a l i z e d i f t

i n v o l v e d

an e n t r y

f e e . New

ork

law

does

n o t

e n s h r i n e

a s t a n d a r d

so a t

odds

w i t h

common

s e n s e .

I n d e e d ,

a s a l l of

t h e

s k i l l s t u d i e s

and e x p e r t s

u n i f o r m l y

confirmed below

DFS

s

p r e d o m i n a n t l y

a

ga m e of

omplex

s t r a t e g y where

c o n t e s t a n t s a c t a s

g e n e r a l managers

of

h e i r f a n t a s y

teams

p u t t i n g

t o g e t h e r

t h e i r

r o s t e r s

under s e t

r u l e s and

s a l a r y

c a p s , w i t h

t h e winner

d e t e r m i n e d

by

whose

f a n t a s y

team

o u t p e r f o r m s

o t h e r

c o n t e s t a n t s

f a n t a s y

t e a m s .

That

d e f i n e s

a

ga m e of

s k i l l T h e

r e c o r d

i s

b a r r e n

of

e v i d e n c e

c o n t r o v e r t i n g

D r a f t K i n g s

e x p e r t s

and

s k i l l

s t u d i e s .

T h e

NYAG s

a t i o n a l i z a t i o n s

f o r

a t t e m p t i n g t o

a v o i d

t h e

consequences of

h i s

r e p e a t e d

c o n c e s s i o n s

t h a t

f a n t a s y s p o r t s

a r e

l e g a l . h a v e

b e c o m e

i n c r e a s i n g l y

tenuous

and

i n c o h e r e n t w i t h

each

s u c c e s s i v e

f i l i n g .

The

o b v i o u s

t r u t h

i s t h a t t h e r e i s

no

d i f f e r e n c e

between

t h e two

under

New York

law.

I t i s

t h e s a m e

game

d i f f e r e n t i a t e d o n l y by

t h e

p e r i o d

of

time over

which

each

i s

p l a y e d .

T he

NYAG

c o n t e n d s

t h a t

s e a s o n

- l o n g

c o n t e s t o p e r a t o r s

c h a r g e

l e s s

i n

f e e s ,

and


c o l l e c t

l e s s i n

p r i z e s . NYAG

r. 36- 3 7 .

But

t h e NYAG

nowhere

e x p l a i n s

h o w

t h e s e

m a r g i n a l

d i f f e r e n c e s

c o u l d even

c o n c e i v a b l y have

any

l e g a l

s i g n i f i c a n c e

—

a i l u r e

t h a t

f u r t h e r

u n d e r s c o r e s t h e

NYAG s

a r b i t r a r i n e s s

i n

o r d e r i n g

d a i l y

f a n t a s y

s p o r t s

o p e r a t o r s

t o

s h u t

d o w n w h i l e

p e r m i t t i n g

s e a s o n

- l o n g


o p e r a t o r s

t o s t a y

i n

b u s i n e s s .



Last

week

t h e

NYAG

i l e d

w i t h

t h i s

Court a

l e t t e r

from

t h e

I l l i n o i s

A t t o r n e y

General

o p i n i n g

o n

t h e

l e g a l i t y

of DFS

under

t h a t

s t a t e s

u n i q u e

gambling

l a w s .

The NYAG

eems

t o

t h i n k t h e

e v o l v i n g

s i t u a t i o n

i n

I l l i n o i s

s u p p o r t s i t s

p o s i t i o n i n

t h i s

c a s e

—as

opposed

t o

t h e

more

t h a n

40

o t h e r

s t a t e s

where

DraftKings

remains

i n

b u s i n e s s

w i t h o u t

an y

s e r i o u s

q u e s t i o n

from

t h o s e

s t a t e s

r e g u l a t o r s ,

i n c l u d i n g

t h e

e i g h t

o t h e r

s t a t e s

t h a t

have la ws

v i r t u a l l y

i d e n t i c a l

t o

New

Y o r k s .

B u t

t h e

NYAG

has

missed

t h e

s i g n i f i c a n c e

of t h e

I l l i n o i s

p r o c e e d i n g s .

Although

t h e

I l l i n o i s

A t t o r n e y G e n e r a l ,

l i k e

t h e

NYAG

iews

DFS

c o n t e s t s

a s

u n l a w f u l

gambling

t h e

I l l i n o i s

A t t o r n e y

General

has

r e c o g n i z e d t h a t ,

g i v e n t h e

u n c e r t a i n t y

i n t h e

law

r a f t K i n g s

m a y

remain

i n

b u s i n e s s

u n t i l

t h e

c o u r t

r u l e s

o n

t h e

m e r i t s i n

a n

e x p e d i t e d

p r o c e e d i n g .

This

approach

r e f l e c t s

t h e

common

- s e n s e

p r i n c i p l e

t h a t

where a

c o u r t i s

p r e s e n t e d

w i t h

a

q u e s t i o n

o f

i r s t

i m p r e s s i o n

c o n c e r n i n g

t h e

l e g a l i t y o f

a

b u s i n e s s

—and

h e r e

i s n o

a c t u a l

showing

o f

e v e r e

a n d

immediate

harm t o

t h e

p u b l i c

— i t

would

be

u n f a i r

a n d

u n j u s t i f i e d

t o

f o r c e

t h e

b u s i n e s s t o

c l o s e

i t s

d o o r s

b e f o r e

b o t h

s i d e s

have

been

a b l e

t o

p r e s e n t

e v i d e n c e

i n

a

m e r i t s

h e a r i n g .

Extending

t h e

s t a y

h e r e

pending

a p p e a l

would

accomplish

m u c h

t h e

s a me

p u r p o s e .

DraftKings

i s

l i k e l y

t o

p r e v a i l

o n t h e

m e r i t s

o f

t h i s

a p p e a l

and

w i l l

s u f f e r

i r r e p a r a b l e

f i n a n c i a l a n d

r e p u t a t i o n a l

harm i f

t h e


i n j u n c t i o n

goes

i n t o

e f f e c t .

Moreover h e

b a l a n c e

o f

q u i t i e s

t i p

d e c i d e d l y i n

D r a f t K i n g s

f a v o r , a s

t h e

5





Daily

f a n t a s y

s p o r t s

c o n t e s t s ,

which

span a

day

o r

week,

r e a

n a t u r a l

outgrowth o f

e a s o n - l o n g

f a n t a s y

s p o r t s

c o n t e s t s .

K a r a m i t i s

A f f . ¶ .

DFS

c o n t e s t s

have

been

o f f e r e d

t o

New

orkers a t

l e a s t

s i n c e

June 2007.

A f f i d a v i t

o f

J a s o n

Robins

Robins

A f f . ) ,

a t t a c h e d

t o t h e

F i g u e r e d o

A f f i r m . a s

Ex. L,¶

.

S i n c e

t h a t

t i m e ,

m a n y

companies

have

e n t e r e d

t h e DFS

a r k e t p l a c e ,

i n c l u d i n g

FanD ue l

founded

i n

2009)

nd

DraftKings

founded

i n

2 0 1 2 ) .

I d .

D r a f t K i n g s

c u r r e n t l y

s e r v e s

more

t h a n

t w o

m i l l i o n

customers

a c r o s s

44 t a t e s ,

i n c l u d i n g

hundreds

o f

housands

i n

New

ork.

D r a f t K i n g s

has

f i n a n c i a l

s u p p o r t

from

p a r t n e r s h i p s

w i t h

major

s p o r t s

e n t i t i e s

t h a t

have

s t r o n g l y

opposed s p o r t s

gambling

but

e n d o r s e

f a n t a s y

s p o r t s

c o m p e t i t i o n s ,

such

a s

M aj o r

League

B a s e b a l l , t h e

N a t i o n a l

Hockey

League,

M aj o r

League

S o c c e r ,

and t h e

owners

o f

numerous

New

Y o r k

- b a s e d

s p o r t s

t e a m s .

See

A f f i d a v i t o f

Timothy

D e n t

D e n t

A f f . ) ¶

5 .

DraftKings

has

o p e r a t e d

o p e n l y ,

h o n e s t l y ,

and

l e g a l l y i n

New

o r k

f o r

n e a r l y

f o u r

y e a r s .

s

i t h s e a s o n

- l o n g

games,DFS

o n t e s t a n t s

a c t a s

General

M an ag er s

o f a

f a n t a s y

team

and compete

a g a i n s t

o t h e r


t o

s e e

w h o

can

e x e c u t e

t h e

General

M a n a g e r

s k i l l

- s e t

most

f f e c t i v e l y .

Robins

A f f . ¶

;

a r a m i t i s

A f f . ¶

.

I n

t h e

f i r s t phase

o f

a

a n t a s y

s p o r t s

c o n t e s t ,


s e l e c t

r e a l

- w o r l d

a t h l e t e s

t o

f i l l

v i r t u a l

p o s i t i o n s

o n a

f a n t a s y

s p o r t s

team,

e g a r d l e s s

o f

w h a t

team t h e

a t h l e t e s

p l a y

f o r

i n r e a l

l i f e

Robins

A f f . ¶ ¶

5,

.

7



S e l e c t i n g a

a n t a s y

team

r e q u i r e s

c o n t e s t a n t s t o

e x e r c i s e

s k i l l ,

i n c l u d i n g

t h e

assessment of a

wide

a r r a y

of

a c t o r s ,

such

as

h e

h i s t o r i c a l

performance

of

a t h l e t e s ,

t h e

on

- f i e l d

s t r a t e g i c

t e n d e n c i e s of e a l

- l i f e

coaches

and

a t h l e t e s ,

team

an d

a t h l e t e

matchups,

weather

a t t e r n s ,

and

i n j u r y

r i s k s .

A f f i d a v i t

of

e t e r

Jennings

Jennings

A f f . ) ,

a t t a c h e d t o

t h e

Figueredo

Affirm. as

Ex.

M,

~

7

1 1 .

DFS


r e l y

on

s p o r t s

knowledge

and

evidence

-based

a n a l y t i c s

t o

assemble

f a n t a s y

r o s t e r s .

Robins

Aff.~¶

5, .

The only

evidence

i n

t h e

r e c o r d

below

demonstrates

h a t

t h e

most

u c c e s s f u l f a n t a s y c o n t e s t a n t s

expend

s i g n i f i c a n t

time

and

e f f o r t

honing

h e i r

a n a l y t i c a l

s k i l l s .

Jennings

Aff.¶ .

The

record

below

e s t a b l i s h e s

t h a t DFS

o n t e s t s

a r e

dominated

b y

k i l l ,

not

chance.

Karamitis

Aff.

¶¶

8-23;

Jennings

A f f . ~¶

6

-12.

Every

p i e c e of

e c o r d

evidence

concerning

the

a c t u a l

outcomes ofDFS

o n t e s t s

demonstrates

h a t a

small

group

of

k i l l e d


c o n s i s t e n t l y

win.

One tudy

of

a i l y

f a n t a s y

b a s e b a l l

outcomes foun d

t h a t

u s t

1 . 3 %

of

o n t e s t a n t s

won

91

f h e

p r i z e s .

Karamitis

A f f .

¶

1 .

Another

study

conducted

b y a

U n i v e r s i t y

of

hicago

p r o f e s s o r of

t a t i s t i c s and

econometrics

concluded

t h a t

i t

i s

overwhelmingly

u n l i k e l y t h a t

t h e

performance

of any

e x c e p t i o n a l l y

performing

o n t e s t a n t

could

b e

due

o

chance.

G i l u l a

A f f . ,

a t t a c h e d a s

Ex.5 o

t h e

S c h i l l e r A f f . ,¶

7.

'And

y e t

another

study

comparing

the

performance

oftop

-

e a r n i n g


a g a i n s t

randomly

generated

l i n e u p s

found

t h a t

t h e

top


outperformed t h e



random

l i n e u p s

between

82%

nd

96%

f

h e

time,

depending

on h e

s p o r t .

Karamitis

A f f . ¶¶

14-17.

The

NYAG

id not

f f e r any

evidence below,

and

t h e

t r i a l c o u r t

r e l i e d

on

no

evidence i n

t h e r e c o r d , t o

rebut

h e

s k i l l

-based n a t u r e

ofDFS

o n t e s t s .

In f a c t ,

t h e

NYAG

cknowledges

h a t

DFS

o n t e s t a n t s

may

x e r c i s e

some

k i l l (NYAG

r.

3 ) ,

and h i s

own

n v e s t i g a t i o n

confirmed

t h a t

the top one

p e r c e n t of

raftKings'

winners

e c e i v e

t h e

v a s t

m a j o r i t y of

h e

winnings.

S c h i l l e r

A f f . ,

Ex.3

t 2.

I m p o r t a n t l y ,

a t o r a l

argument

below,

h e

NYAG

dmitted

t h e r e

i s

no

d i s t i n c t i o n

about

whether d a i l y

f a n t a s y

s p o r t s

i s

more

or

l e s s

dependent

on

k i l l f u l

d e c i s i o n s

than

t r a d i t i o n a l


l e a g u e s .

November

25,

015

Hearing

T r .

63

9

-12,

a t t a c h e d

as Ex.

2

o

the

S c h i l l e r

A f f .

B. The

coring

i n All

Fantasy

Sports

Season

-Long

and

Daily)

m

Tl_• TL

A

L L._... C7 .1.. _L.. l~

4~L.

. Ti - . ~.

liepenas

Jp~rr

i~u

i ~ ~ ~ s :

lr

L~lIl~1ClCJ

~7C1Cl;~Clal.

u y

111G 1~

a;~ia~y

Contestant

and the

Fantasy Points

Generated

b y

Those

A t h l e t e s .

Once

each

c o n t e s t a n t

i n

a

a n t a s y

c o n t e s t

has

i n i s h e d

s e l e c t i n g

a

a n t a s y

team,

h e

sec ond phase

of

h e

f a n t a s y

c o n t e s t o c c u r s .

In t h a t

phase,

h e

p o i n t s

scored by

h e

c o n t e s t a n t s '

f a n t a s y

teams a r e

c a l c u l a t e d .

Robins

A f f .

~

. A


score

equals

h e

sum

f

h e f a n t a s y

p o i n t s

g e n e r a t e d

by

h e

a t h l e t e s

t h e


s e l e c t s i n

her

i n e-up.

Those

f a n t a s y

p o i n t s ,

i n

t u r n ,

a r e

c a l c u l a t e d

based on

h e

performance

of h e

r e a l

l i f e

a t h l e t e s .

I d .

Thus,

h e

r e s u l t s

of

DraftKings'

a n t a s y

c o n t e s t s

a r e

not e t h e r e d

t o t h e

outcomes

of e a l

-world



s p o r t i n g

e v e n t s .

S i m i l a r l y ,

because

f a n t a s y

s p o r t s

c o n t e s t s

depend

on

a


f a n t a s y

team

as

a

whole

outscoring

the other

f a n t a s y

teams, the

outcome

of

a DFS

c o n t e s t

—as

ith

a l l

f a n t a s y

s p o r t s

c o n t e s t s

—does ot

depend

on

any

p a r t i c u l a r

a t h l e t e s '

h i t t i n g

any

p a r t i c u l a r

benchmarks of

n d i v i d u a l

performance e . g . ,

throwing

a t

l e a s t

t h r e e

touchdowns or

gaining

a t

l e a s t

100

y a r d s ) .

Robins

Aff.

¶

11.

Indeed,

the

NY G

cknowledges

h a t

a DFS

o n t e s t a n t

wins

f h i s

r o s t e r

as a

whole

r e c e i v e s

more

p o i n t s

than

other

r o s t e r s .

NY G

r . 2; see

also

NY G

r .

7

The

winning

DFS

eam

a t the

end

of

he day

or

w e e k i s

the one

with

the

most

p o i n t s ) .

C.

Both

DraftKings

and

Season

-Long

Fantasy

Sports

Providers

Ch a r g e Entry

Fees

and

Award

Cash

Prizes.

F~~ ~~;

; P ~f t ~

il~'C

~.~ntPCtc~ T ) r a f t T { i n a ~ awarcl~ cash

nri?es

to

th e

w i n n e r ( s ) .

The

amount

of h e s e

p r i z e s i s

f i x e d and

announced

i n

advance

of h e

c o n t e s t ;

t

does

not vary

depending

upon

p a r t i c i p a t i o n or

revenue

g e n e r a t e d from

the

c o n t e s t .

Robins

Aff.¶

2.

C o n t e s t a n t s

p a r t i c i p a t i n g

i n

c o n t e s t s

with

cash

p r i z e s

pay

an e n t r y

f e e .

I d .

These

e n t r y f e e s

compensate

DraftKings

f o r

i t s

work

and

expenses

a d m i n i s t e r i n g

DFS

o n t e s t s .

DraftKings

r e t a i n s

t h e

e n t r y f e e s

r e g a r d l e s s

of

whether

a

c o n t e s t a n t

wins or

l o s e s

t h e

c o n t e s t .

Robins

A f f .

¶

3.

This

i s

p r e c i s e l y

t h e

same

model

employed

by

many

season

-long

f a n t a s y

s p o r t s

10



p

r o v

i d e

r s ,

a

s

t h

e

e v i

d e n

c e

b

elo

w

e s

t a b l

i s h

e d . l

S e

e , . g .

J e n

n i n

g s

A

f f .

E

x.

¶

7

(

sea

son

-

l o n

g

f

a n t a

s y

p r o

v i d

e r s

su

ch

a s

ES

PN

f f

e r a

e n

thou

san

d d o

l l a

r p

r i z

e ) .

PRO

CE

DU

RA

L

HI

ST

OR

Y

F

or

a

lmo

st

o u r

y e a

r s ,

Dra

ftK

ing

s

has

o p

e r a

t e d

i n

Ne

w

o

rk

ope

nly

a n d

t

r a n s

p a r

e n t l

y .

Be

for

e t h

e N

YA

G

s u

d de

n

l

a w s

u i t ,

n

o s

t a t e

p r o

s e c

u t o r

o r

r e g

u l a

t o r

h a

d

e v

e r q u e

s t i

o n e d

t h

e l

e g a l

i t y o

f a n

t a s y

s

p o r

t s

u

n de

r

Ne

w or

k

l

aw.

O

n c

tob

er

6,

01

5,

h e

N

YA

G

eg

a n

i

n v e

s t i g

a t i

n g

D r a

f t K

i n g

s f o

r

a

n

u n r e l a t e d

m a t t e r .

Robi n s

A f f .

¶ 7 .

At

n o

p o i n t d u r i n g t h e

NYAG s

on t h

- l o n g

i n v e

s t i

g a t i

o n ,

w i

t h whi

c h

Dra

ftK

ing

s

u l

l y

c

o o p e

r a t

e d ,

d

i d t h

e

NY

AG

v

e r

i

n d i

c a t e

h

e

w

a s

n v e

s t i

g a t i

n g

D

r a f

t K i

n g s

e g

a l i t

y .

I d .

¶

8 .

B u

t o

n

No

ve m

b e r

1 0 ,

2

015

,

h e

N

Y

AG

s s

u e d

ace

ase

-a

n d-

d e s

i s t l

e t t e

r d em

a n d

i n g

h

a t

D r

a f t

K i n

g s

e

f f e

c t i v

e l y

s

h u t

own

t s

Ne

w

or

k o p

e r a t

i o n

s .

N

Y

AG

e t t

e r

a t

1 ,

3- 4 .

O

n o

ve

m be

r

17

,

2

015

,

h

e NY

AG

i l e

d a m

ot i

on f o r

a p

r e l

i m i

n a r y

i n j

u n c

t i o n

,

s e

e k i

n g

t o

e n

j o i n

D

r a f

t K i

n g s

o p e

r a t

i o n s

i n t h e

S

t a t e

o

f N

ew

o

rk.

On

ec

em

ber

1 1 ,

2

015

,

h e

S

u p

rem

e Co

urt

s s u

e d

a

p r e

l i m i

n a r

y

i n j

u n c

t i o n

r e

q u i

r i n g

D

r a f

t K i

n g s

t

o

s h

u t

ow

n l

l

o

p e r a

t i o

n s

i n

Ne

w or

k.

T

h e c o

u r t

i

s s u

e d

1 T

h e

a

c t t h

a t ES

PN

f f e

r s

a

$10

,000

c a s

h p r

i z e

i n

i t s

s e

a s o n

- l

o n g

f a n

t a s y

s p

o r t s

c o n

t e s t

s

d i s p r o v e s t h e

NYAG s s s e r t i o n ,

b a s e d

on

n o

r e c o r d

e v i d e n c e ,

h a t d a i l y

and

s e a s o n - l o n g

f a n t a s y

s p o r

t s a

r e d i s

t i n g

u i s h

a b l e

b a

s e d

o n

h e d

i f f e

r e n t

wa y

s

h

a t t

h e s e

a c t i v

i t i e

s

h a n

d l e d

m o

n e y

n

d

t h

a t

s e a

s o n

- l o

n g

f a n t

a s y

s p o

r t s

d

o

n o t i

n v o l

v e

m a

s s i

v e m

onet

ary

p

a y o

u t s .

N

YA

G

r

. 3 6

.

S

i m i l

a r l y

,

t h e

N

YAG

s o

n t e n

t i o n

t h a

t

s e a

s o n

- l o n

g

f a n

t a s y

s

p o r t

s p r o

v i d e

r s a

c c e

p t

only

s

m a l

l

` a d

m i n i

s t r a

t i v e

f

e e s '

t o

c o v

e r t h

e

c o s t

s

of p e

r a t i

n g

a

w

e b s i

t e

o r

s e r

v i c e

(N

YAG

r .

37)

s

n

o t

b

a s e d

on

a

n y

e a l

e v

i d e n

c e :

t h

e

N

Y

G

f f e r

s

a

s

s u p

p o r t

o

n l y

s e l f

-

s

e r v i

n g

a s s

e r t i

o n s fr

om

h i s

own

o

m p l

a i n t

a

nd

c e a

s e

-a n

d- d e

s i s t

l

e t t e

r .

1 1



t h i s

i n j u n c t i o n

w i t h o u t

an


h e a r i n g

o r l i v e

t e s t i m o n y

on

h e

m a t e r i a l

i s s u e s .

That

same day,

raftKings

a p p e a l e d , and

a

u s t i c e

of

h e

A p p e l l a t e

D i v i s i o n

i s s u e d

an n t e r i m s t a y

of

h e

Supreme

C o u r t ' s

o r d e r

g r a n t i n g

t h e


i n j u n c t i o n .

ARGUMENT

T h e

Court

Should

G r an t

A

tay

Pending

Appeal.

This

Court

has

d i s c r e t i o n t o

s t a y

a l l

p r o c e e d i n g s t o

e n f o r c e

t h e

judgment r

o r d e r a p p e a l e d

from

pending

an

a p p e a l .

CPLR

5 1 9 ( c ) ;

see

G r i s i

v .

S h a i n s w i t ,

119

A.D.2d 418,

21

l s t

Dept

9 8 6 ) .

T he

Court

l s o

has

d i s c r e t i o n

t o

modify

o r

l i m i t

a


i n j u n c t i o n

...pending

a p p e a l

under CPLR

e c t i o n 5518.

I n

e x e r c i s i n g i t s

d i s c r e t i o n , t h e

Court s

duty

-bound o

c o n s i d e r

t h e

r e l a t i v e

h a r d s h i p s

t h a t

would

r e s u l t

from

g r a n t i n g

(or

denying)

a

t a y .

Da

i l v a v .

Musso,

76

N.Y.2d 436,

43

. 4

(1990).

T he

Court

l s o

m a y

o n s i d e r t h e m e r i t s

of

h e

a p p e a l ,

i d .

whether a

t a y i s

i n t h e

p u b l i c

i n t e r e s t ,

and

whether g r a n t i n g

a t a y

w i l l

p r e j u d i c e

t h e

non

-

moving

see

R u s s e l l

v .

N.

.

C.

Hous.

u t h . ,

160

Misc.

Zd 237,

239 Sup.

t .

Bronx

County

1 9 9 2 ) . 2

2

h e

NYAG s

e l i a n c e

on DeLury

.

C i t y

o f

New o r k ,

4 8

A.D.2d

4 0 5

1 s t Dept

9 7 5 ) ,

and

Nken

.

Holder,

556

U.S. 418 2009),

s

m i s p l a c e d ,

s i n c e n e i t h e r

c a s e

i n v o l v e d a

motion

f o r

a

s t a y

of a


i n j u n c t i o n pending

a p p e a l .

DeLu r y

n v o l v e d a

motion o

v a c a t e t h e

a u t o m a t i c s t a y

pending a p p e a l

t h a t

a r i s e s

under

CPLR

519(a)

w he n

h e r e i s

a

udgment

g a i n s t

a

government

n t i t y ,

not a

motion o s t a y

under

CPLR

5 1 9 ( c ) .

A n d Nken

concerned

a

o r e i g n

c i t i z e n ' s

a p p l i c a t i o n

f o r

a

t a y

of a

i n a l

o r d e r (of

emoval from

h e

U n i t e d S t a t e s ) ,

n o t a


i n j u n c t i o n .

12



These

a c t o r s

a l l

weigh

i n f a v o r

of

t a y i n g

t h e

enforcement of

h e


i n j u n c t i o n

i n

t h i s

c a s e .

DraftKings

i s

l i k e l y

t o

s u c c e e d

on h e

m e r i t s ; a


i n j u n c t i o n

would c a u s e

immediate and


ha rm by

o r c i n g

DraftKings o

s h u t d o w n

t a t e w i d e ;

and

m a i n t a i n i n g t h e

s t a y t h a t

i s

c u r r e n t l y

i n

p l a c e

w i l l n o t

h a r m

t h e

p u b l i c i n any

way. To

h e

c o n t r a r y , t

w i l l

p r e s e r v e

t h e

s t a t u s

quo

o r

a

s h o r t

p e r i o d

u n t i l

t h i s

Court can

r e s o l v e

t h i s a p p e a l on

h e

m e r i t s .

I .

DraftKings s

Likely

t o

Succeed

on the

M e r i t s .

A

r e l i m i n a r y

i n j u n c t i o n

i s

a

d r a s t i c

remedy

and

w i l l

o n l y

be

g r a n t e d

i f

h e

m o v a n t

s t a b l i s h e s a

l e a r r i g h t

t o

i t

under h e

law

a nd

h e

u n d i s p u t e d

f a c t s

found

i n t h e

moving p a p e r s .

K o u l t u k i s

v .

P h i l l i p s ,

285

A.D.2d 433,

35

l s t Dept

2001). t

s h o u l d

not be

g r a n t e d where

h e

f a c t s

a r e i n

s h a r p

d i s p u t e .

T hom son v .

Daisy's

Luncheonette

Corp.,7 isc.

3d

1019(A), 2005

N.Y.

l i p

Op.

50674(U),

*3 Sup. t .

Kings

County

2005).

A

r e l i m i n a r y

i n j u n c t i o n

should

be used

s p a r i n g l y ,

Fischer

v .

D e i t s c h ,

1 68

A.D.2d

599,

0 1 (2d

Dep't 1 9 9 0 ) , and

where

used t o

change t h e

s t a t u s

quo,

such a s

by

s h u t t i n g

d o w n a

b u s i n e s s ,

t

s h o u l d

o n l y i s s u e

i n

e x t r a o r d i n a r y

c i r c u m s t a n c e s ,

United

or

Pe ac e

&Justice

v .

Bloomberg,

isc.

3d 845,849

Sup.

t . N.Y.

County

2 0 0 4 ) . In

o r d e r t o

o b t a i n

a


i n j u n c t i o n , t h e

moving

p a r t y

must

d e m o n s t r a t e

( 1 )

i k e l i h o o d

of

u c c e s s

on

h e m e r i t s ;

(2 )

r r e p a r a b l e

i n j u r y

a b s e n t

t h e

i n j u n c t i o n ;

a nd 3 )

b a l a n c i n g of

h e

e q u i t i e s i n

i t s f a v o r .

M at t er

of

5

N.

. C.

1 3



P o l i c e

O f f i c e r s

v

C i t y of

New o r k ,

34

A.D.3d 392,

394 1 s t

Dept

0 0 6 ) .

Conclusory

l l e g a t i o n s

w i l l

not

a t i s f y

a

movant's b u r d e n :

Proof

s t a b l i s h i n g

t h e s e

e l e m e n t s

m u s t

be

by

f f i d a v i t

and o t h e r

competent

r o o f ,

w i t h


d e t a i l .

S c o t t o v

Mei,

19

A.D.2d 181,

182

1 s t

Dept 9 9 6 ) .

Where h e

i s s u e

b e i n g

r e s o l v e d i s

one

of

i r s t

i m p r e s s i o n ,

a

r e l i m i n a r y

i n j u n c t i o n

upending

h e

s t a t u s

quo s

i n a p p r o p r i a t e .

See

Tucker

T o i a ,

54

A.D.2d

322,

326 4 t h

Dept

1976)

i s s u i n g


i n j u n c t i o n

t o

p r e s e r v e t h e

s t a t u s

quo

on an

s s u e

of

i r s t

i m p r e s s i o n

while

h e

l e g a l i s s u e s a r e

d e t e r m i n e d

i n

a

e l i b e r a t e

and

u d i c i o u s

ma n n er

) .

n

r d e r

g r a n t i n g

a r e l i m i n a r y

i n j u n c t i o n

m u s t be

e v e r s e d i f

h e

t r i a l

c o u r t

abused

t s

d i s c r e t i o n .

See

Heldman

Douglas,

33

A.D.2d

695, 95

2d

Dept 9 6 9 ) .

The NY G

a i l e d t o

m a k e

a

prima

a c i e showing

of e a s o n a b l e

p r o b a b i l i t y

of

u c c e s s .

Weissman

Kubasek,

112 A.D.2d 1086,

1086

2d Dep't

1 9 8 5 ) .

D r a f t K i n g s ' d a i l y f a n t a s y

s p o r t s

c o n t es t s a r e

n o t

gambling s

New

or k

law d e f i n e s

t h a t

t e r m .

e r s o n

engages n

gambling w he n

he t a k e s

o r r i s k s

something

of

a l u e

upon h e

outc ome of

o n t e s t

of hance

o r a

u t u r e

c o n t i n g e n t

event not

under i s

c o n t r o l o r

i n f l u e n c e ,

upon

an

agreement

r

u n d e r s t a n d i n g t h a t

he

w i l l r e c e i v e

something of

a l u e i n

t h e e v e n t

of

e r t a i n outcome.

N.Y.

enal

Law

§

2 5 . 0 0 ( 2 ) .

D r a f t K i n g s ' d a i l y

f a n t a s y

c o m p e t i t i o n s

do

o t

c o n s t i t u t e

gambling

o r

t wo

independent

e a s o n s :

(1)

DFS

o n t e s t s

do

o t

depend on

h e

14



outcome of a

o n t e s t of

hance

r

a

f u t u r e

c o n t i n g e n t

e v e n t not

under

t h e

c o n t e s t a n t ' s ]

c o n t r o l

o r

i n f l u e n c e

and(2)

h e

bona

i d e

e n t r y f e e s

c h a r g e d

by

D r a f t K i n g s

d o

not

e q u i r e


s t a k e o r

r i s k

something of

a l u e

upon

h e

outcome of

h e

c o m p e t i t i o n s .

A.

Daily Fantasy

Sports

Contests Are

Not

Contests

of

Chance.

The

r i l c o u r t

e r r e d i n

c o n c l u d i n g

t h a t

t h e NY G

i k e l y

would

prove t h a t

d a i l y

f a n t a s y

s p o r t s

area

` c o n t e s t

of

hance'

s

c u r r e n t l y s t a t e d

i n

Penal

Law

§225.00

1 ] , [ 2 ] .

Op.

.

This c o n c l u s i o n

had

n o

s u p p o r t

i n

t h e r e c o r d ,

and

t h e

t r i l

c o u r t

o f f e r e d

n o

e x p l a n a t i o n

of what

v i d e n c e

p e r s u a d e d

him t o r e a c h

t h i s

c o n c l u s i o n .

c o n t e s t

of

hance s

any

c o n t e s t ,

game,

aming scheme

o r

gaming

d e v i c e

i n

which h e

outcome

depends

n a

m a t e r i a l

d e g r e e

upon

an

element

of

chance,

o t w i t h s t a n d i n g

t h a t

s k i l l of

h e


may

l s o be a

a c t o r

t h e r e i n .

N.Y.

enal

Law

§

2 5 . 0 0 ( 1 ) .

The mere

p o t e n t i a l

i n f l u e n c e

of

hance on

h e

outcome

of a

g am e

never

s u f f i c e s

t o

prove

t h a t t h e

ga me s a

c o n t e s t

of

h a n c e .

I n s t e a d ,

chance

must

f f e c t

t h e

g am e

o a

m a t e r i a l

d e g r e e . I d .

The

m a t e r i a l i t y

r e q u i r e m e n t

i s

only

s a t i s f i e d i f

chance i s

t h e

dominating

element h a t

d e t e r m i n e s

t h e

r e s u l t of

h e

game. People

v .

Li

Ai

Hua,

24 Misc.

3d

1

142,

145 (Grim.

t .

Queens

County 2009)

emphasis

a d d e d ) .

1 5







c o m p o s i t i o n

of

i s

l i n e u p . DFS

o n t e s t s

e l i m i n a t e

t h i s

chance

element by

a l l o w i n g

each

c o n t e s t a n t

t o

s e l e c t any

a t h l e t e . 3

Robins

A f f .

¶ .

• e l e c t i o n

- t o -

Outcom e

Lag. In

s e a s o n

- l o n g

f a n t a s y

s p o r t s ,

l i n e u p s

a r e

s e l e c t e d

o n l y once,

t t h e

s t a r t

of

h e

s e a s o n ,

exposing

s e a s o n

- l o n g

f a n t a s y

teams o

t h e

e f f e c t

of

u l l

s e a s o n ' s

b a r r a g e

of

eather and

i n j u r y

e v e n t s ,

w i t h

l i m i t e d

a b i l i t y t o

change h e

l i n e u p .

By

o n t r a s t , i n DFS,

h e

l a g

between

a t h l e t e

s e l e c t i o n

and

c o m p e t i t i o n

c o m p l e t i o n i s

m u c h

h o r t e r

e . g . ,

days

o r

weeks ,

l l o w i n g

t h e

c o n t e s t a n t

t o

b e t t e r

u n d e r s t a n d t h e

r i s k s

of

n c l e m e n t weather

and

i n j u r i e s

and

compensate

o r

t h e s e

e l e m e n t s

a c c o r d i n g l y .

K a r a m i t i s

A f f .

¶

3 .

Th e

r i a l

c o u r t

e r r e d

i n

d e c l i n i n g t o

a d d r e s s t h e

i n c o n s i s t e n c y

of

h e

NYAG s

n t e r p r e t a t i o n

of

h e

law ,

which

s o m e h o w

m a k e s

e a s o n

- l o n g

f a n t a s y

s p o r t s

l a w f u l

w h i l e p r o h i b i t i n g

d a i l y

f a n t a s y

s p o r t s .

Every

p i e c e

of

e c o r d

e v i d e n c e

on

h e

a c t u a l

outcome

of

a i l y

f a n t a s y

s p o r t s

c o n t e s t s

c o n f i r m s

t h a t a

m a l l

group

of

k i l l e d


c o n s i s t e n t l y

dominates

t h e

c o n t e s t s . See

K a r a m i t i s

A f f .

¶¶

14

- 1 7 ,

21;

i l u l a A f f . ¶¶

16- 1 7 .

The

NYAG

d i d not

f f e r ,

and

h e

t r i a l c o u r t

d i d

not

d e n t i f y ,

a n y t h i n g

t o

r e b u t t h e

overwhelming

e v i d e n c e

e s t a b l i s h i n g

t h a t DFS

o n t e s t s a r e

ga m e s

of

k i l l .

I n

f a c t ,

t h e

NYAG s

own

n v e s t i g a t i o n

confirmed

t h a t

t h e t o p

one

p e r c e n t

of

r a f t K i n g s

3 Although


c a n n o t

t r a d e

a t h l e t e s i n d a i l y

f a n t a s y

s p o r t s , t h e

r e l a t i v e l y

s h o r t

window

between

h e

s e l e c t i o n

of

t h l e t e s

and

d a i l y

f a n t a s y

c o m p e t i t i o n s

e l i m i n a t e s

t h e

need

o r

t r a d e s .



winners

r e c e i v e

t h e v a s t

m a j o r i t y

of

h e

winnings

a

i n d i n g

completely a t

odds

with t h e

NYAG's

laim

t h a t

d a i l y

f a n t a s y

s p o r t s

a mount o

gambling

because

they

a r e

g a m e s of

hance.

Nov.

10,

2015

NY ~

e t t e r

a t

2.

T here i s

simply

nothing

i n

t h e

r e c o r d

supporting the

t r i a l

c o u r t ' s

c o n c l u s i o n .

T h e

r i a l

c o u r t ' s

obviously

erroneous

holding

t h a t

Fanduel,

n c . and

D r a f t k i n g s ,

n c . ,

do

not

e f u t e t h e

evidence

provided by

t h e NYAG

upposedly

proving t h a t

d a i l y

f a n t a s y

s p o r t s

competitions

a r e

g a m e s

of

hance,

Op .

,

demonstrates

t h a t

t h e

c o u r t

d i d

not

meaningfully

engage

with t h e

r e c o r d

b e f o r e

i s s u i n g

i t s

d e c i s i o n . 4

Although

t h e t r i a l

c o u r t

never

s t a t e d

t h e

b a s i s

f o r

i t s

h o l d i n g ,

t

r e c i t e d

t h e

NYAG's

istaken

a s s e r t i o n

t h a t

t h e

outcomes

of

a i l y

f a n t a s y

s p o r t s

c o n t e s t s

depend

s u b s t a n t i a l l y

on

chance and

f a c t o r s not

w i t h i n

t h e

DFS

l a y e r ' s

c o n t r o l ,

i n c l u d i n g

whether

t h e

a t h l e t e s

chosen

a r e

i n j u r e d ,

or

t h e

g a m e i s

` r a i n e d

o u t . '

(Op.

) .

But

e i t h e r t h e .

NY G

or

t h e

t r i l

c o u r t

o f f e r e d a n y

a n a l y s i s

s u p p o r t i n g

t h e

conclusion t h a t

t h e e f f e c t

of

a c t o r s

such as

i n j u r y and

weather

were

i n

f a c t

s u b s t a n ti a l ,

and nothing

i n

t h e

r e c o r d

p u r p o r t s

t o

q u a n t i f y

t h e degree

to

w h i c h

4 Even

a s

t h e c o u r t

acknowledged t h a t

[ a ]


i n j u n c t i o n

s h o u l d n o t

be g r a n t e d

u n l e s s

i t s

n e c e s s i t y and

u s t i f i c a t i o n i s

c l e a r based

on

u n d i s p u t e d

a c t s (Op.

t 6)

emphasis

a d d e d ) ,

t

r e l i e d

on

e n t i r e l y

d i s p u t e d

a c t s

t o i s s u e

i t s


i n j u n c t i o n o r d e r , i n c l u d i n g

h o w

e n t r a n c e

f e e s a r e

c a l c u l a t e d ,

whether

d a i l y

f a n t a s y

s p o r t s

a r e

c o n t e s t s

of

k i l l o r

c h a n c e ,

whether t h e

outcome

ofDFS

o n t e s t s

a r e

o u t s i d e t h e

c o n t e s t a n t s '

c o n t r o l

and

i n f l u e n c e ,

and

whether

a


i n j u n c t i o n i s

needed

t o

p r o t e c t

t h e

g e n e r a l

p u b l i c . Each

of

h e s e

i s s u e s

w a s

h o t l y

d i s p u t e d

b e f o r e

Supreme C o u r t .

1 9



i n j u r i e s and

w e a t h e r

a c t u a l l y

a f f e c t DFS

o n t e s t s .

Moreover, h e

t r i l

c o u r t

and t h e

NYAG

a d e

no

e f f o r t

t o

a d d r e s s

t h e

i n d i s p u t a b l e

f a c t t h a t

w e a t h e r ,

i n j u r i e s ,

and

s i m i l a r

f a c t o r s

a f f e c t

numerous

games

of k i l l

n c l u d i n g

s e a s o n

- l o n g

f a n t a s y

sports—

w i t h o u t

c o n v e r t i n g

them

i n t o

c o n t e s t s of

h a n c e .

I n

f a c t ,

even

e a l

l i f e

a t h l e t e s

have no

c o n t r o l

over

t h e s e

a s p e c t s

of

h e i r

s p o r t s .

A

ide

e c e i v e r ,

f o r

example,

annot

o n t r o l a

sudden

g u s t

of

wind

a f f e c t i n g

t h e

q u a r t e r b a c k ' s

throw,

and

a

l a l o m

s k i e r

has

n o

c o n t r o l

over t h e

i c y

c o n d i t i o n s

on

t h e

s k i

s l o p e s .

Yet

h e

p o t e n t i a l

i n f l u e n c e

of

a

g u s t

of

wind

o r i c y

mountain

cannot

r a n s f o r m

f o o t b a l l

o r

s k i i n g

i n t o games

of

h a n c e .

I n

i t s o p p o s i t i o n ,

t h e NYAG

ever

c l a i m s

t o have

c a r r i e d i t s

burden

of

p r o v i n g

t h a t

chance

s

t h e

dominating

element n

d a i l y

f a n t a s y

s p o r t s

c o n t e s t s .

I n s t e a d ,

t s h i r k s

t h a t

burden,

s s e r t i n g

t h a t t h e

t e s t

f o r

m a t e r i a l i t y

does not

c o n s i d e r

what

amount of

hance s

i n v o l v e d .

NYAG

r.

22.

The NYAG

i t e s

n o t h i n g

i n

s u p p o r t

of t s

r e m a r k a b l e

p o s i t i o n

t h a t t h e

amount

of

hance

i n v o l v e d

i s

i r r e l e v a n t t o

t h e

d e t e r m i n a t i o n of

whether a

game

s

a

c o n t e s t

of

h a n c e .

The

NYAG s

o s i t i o n i s

c o n t r a r y

t o

New

ork law,

which

demands

proof

h a t

chance

i s

t h e

dominating

element

h a t

d e t e r m i n e s

t h e

r e s u l t

of

h e

game.

People

v .

Li

Ai

Hua,

4

Misc.

3d a t

1

145

emphasis

a d d e d ) .

Nor does

t h e NYAG

f f e r

any

proof of h e

a c t u a l

r o l e

of

hance n

d a i l y

f a n t a s y

s p o r t s .

I n s t e a d ,

t h e

NYAG

sserts—

w i t h o u t

c i t i n g

any

e v i d e n c e

—that

2 0



whatever

element

of

hance

a f f e c t s

DFS

utcomes s

t h e

sa me

y p e

of

hance

h a t

makes

p o r t i n g

e v e n t s

and

h o r s e

r a c e s

u n p r e d i c t a b l e .

NYAG

r.

23

emphasis

a d d e d ) .

But

h i s

a s s e r t i o n

i s

p u r e

i p s e

d i x i t :

even

though

t

c o u l d be

e s t e d

e m p i r i c a l l y ,

t h e

NYAG

as not

done

s o , and

a


i n j u n c t i o n

s h u t t i n g

d o w n

a

b u s i n e s s

cannot

be b a s e d

on

unproven

s p e c u l a t i o n

and

s p e c i o u s

a n a l o g i e s .

The NYAG

f f e r e d

n o

v i d e n c e

t h a t

s k l l

i n

s p o r t s

b e t t i n g

a c t u a l l y

has a

comparable

n f l u e n c e

t o

t h e

i n f l u e n c e

t

i n d i s p u t a b l y has

n d a i l y

f a n t a s y

s p o r t s .

Nothing

n

t h e

r e c o r d

s u g g e s t s ,

f o r

example,

h a t

1

f

k i l l e d

s p o r t s

g a m b l e r s

r e c e i v e

upwards

of

90

f

winnings

on

a s e b a l l

b e t s ,

o r

t h a t t o p

s p o r t s

gamblers

outperformed

randomly

p l a c e d

b e t s a s

m u c h

a s

82 nd

96

f h e

t i m e ,

a s was

proven

w i t h DFS.

See

K a r a m i t i s

A f f . ¶¶

14

- 1 7 ,

21.

Without

o n d u c t i n g

a

c o m p a r a t i v e

a n a l y s i s

of

h e

d e g r e e t o

which

chance

a f f e c t s

t h e

outcomes

of

p o r t s

b e t t i n g ,

t h e

NYAG

as n o

b a s i s

f o r

a s s e r t i n g

t h a t

t h e

r o l e

of

k i l l

i n d a i l y

f a n t a s y

s p o r t s

i s

comparable

o

t h e

r o l e

of

k i l l i n

s p o r t s

b e t t i n g .

The

NYAG's

lawed

a n a l o g i e s

do

not

w i t h s t a n d

s c r u t i n y

i n any

v e n t .

The

c l a i m

t h a t

whatever

k i l l

DFS

n v o l v e s i s

t h e sa me

y p e of

k i l l

e x e r c i s e d by

s p o r t s

b e t t o r s

o r

h o r s e -

r a c i n g

gamblers

(NYAG

r. 23)

s

simply

wrong.

D a i l y

f a n t a s y

s p o r t s

r e q u i r e

m a n y

k i l l s

t h a t

s p o r t s

gambling

does

n o t .

For

example,

on e

c r i t i c a l

s k i l l

unique

o

d a i l y

f a n t a s y

s p o r t s i s

managing h e

s a l a r y

c a p ,

which

r e q u i r e s

not

n l y

f o r e c a s t i n g

t h e

l i k e l y

performance

of

t h l e t e s ,

b u t a l s o

a s s e s s i n g

2 1



t h e

r e l a t i v e

v a l u e

of

t h l e t e s

g i v e n

t h e

s c a r c i t y

of money

a a n t a s y

team

can

spend

and l o t s

on

a

a n t a s y

team.

Robins

A f f . ¶¶9

- 1 0 .

There s

no

e v i d e n c e

t h a t

s p o r t s

gamblers

e x e r c i s e

t h i s

t y p e

of

k i l l

Nor

s

t h e r e

e v i d e n c e

t h a t

s p o r t s

gamblers

a k e

i n t o

account

what

t r a t e g i e s

t h e i r

opponents

r e

l i k e l y

t o

use

game

h e o r y ) .

By

c o n t r a s t ,

t h e

r e c o r d

d e m o n s t r a t e s

t h a t

t h e

s k i l l

of r e d i c t i n g

and

c o u n t e r i n g

t h e

s t r a t e g i e s of

n e ' s

opponent s

a key

n g r e d i e n t t o

s u c c e s s i n

d a i l y

f a n t a s y

s p o r t s .

See

K a r a m i t i s

A f f .

¶¶

12,

2 . -

The

NYAG's

s s e r t i o n

t h a t

DFS

e p r e s e n t s

n o t h i n g

more

h a n

an

e x t e n s i o n

of

h e

p r o p o s i t i o n

b e t s

and p a r l a y

b e t s

t h a t

have

long

been

a

t a p l e of

p o r t s

b e t t o r s

(NYAG

r. 19)

b s c u r e s

s t i l l

more

r i t i c a l

d i f f e r e n c e s

between

p o r t s

b e t t i n g

and

d a i l y f a n t a s y

s p o r t s .

I n

s p o r t s

b e t t i n g ,

t h e

gambler

competes

g a i n s t

t h e

house,

whereas

n

d a i l y

f a n t a s y

s p o r t s ,


compete

g a i n s t

each o t h e r .

As h e

NYAG

d m i t s ,

[ a ]

DFS

l a y e r

wins

f h i s

r o s t e r a s a

whole

e c e i v e s

more

points

than

other

o s t e r s .

NYAG r.

2

emphasis

d d e d ) .

Moreover,

n

a l l

t h e

. f o r m s of

p o r t s

b e t t i n g

r e f e r e n c e d

by

h e NYAG,

h e

gambler

wins

r

l o s e s

depending

upon h e

gambler

c c u r a t e l y

p r e d i c t i n g a

i m p l e

b i n a r y

outcome.

In

d a i l y

f a n t a s y

s p o r t s ,

by

o n t r a s t ,

i n s o f a r

a s

a t h l e t i c

p e r f o r m a n c e s

c o n t r i b u t e

t o

t h e

f i n a l

s c o r e ,

t h e

p o s s i b l e

c o n t r i b u t i o n s

from

each

performance

a r e n o t

b i n a r y .

I n

f a n t a s y

f o o t b a l l ,

f o r

example,

a

wide

a r r a y

of

t a t i s t i c s

from

each

a t h l e t e ' s

performance

n c l u d i n g

b u t

not

i m i t e d

t o

y a r d s

g a i n e d ,

touchdowns,

umbles,

and

2 2



i n t e r c e p t i o n s

o n t r i b u t e t o

t h e

p o i n t s

t h e f a n t a s y

a t h l e t e

s c o r e s

i n

t h e

f a n t a s y

game.

And

even

f one

a t h l e t e

on

a

a n t a s y

team

performs

more

p o o r l y

t h a n

e x p e c t e d , h e

team can

t i l l

win

f

o t h e r

a t h l e t e s

exceed

e x p e c t a t i o n s

o r

t h e

opposing

f a n t a s y

team

u n d e r p e r f o r m s .

For

h i s

r e a s o n ,

d a i l y

f a n t a s y

s p o r t s

a r e

a l s o

f u n d a m e n t a l l y

d i f f e r e n t from

a

p a r l a y

b e t ,

which

depends

upon

each

b i n a r y

p r e d i c t i o n

i n t h e

s e r i e s

b e i n g

c o r r e c t .

S e e , e . g . ,

1984

N.Y. Op.

t t ' y

Gen.

1

(1984)

p a r l a y

b e t s

i n v o l v e

p r e d i c t i o n

of h e

outcome of

4 r

5

games

and

l l

outcomes

must

conform

w i t h t h e

b e t t o r ' s

p r e d i c t i o n i n

o r d e r

f o r

t h e b e t

t o

win

)

( a t t a c h e d

a s

Ex.

2

o

t h e

S u p p l .

S c h i l l e r

A f f . ) .

Next,

h e

NYAG

s s e r t s

t h a t

a

c o n t e s t of

hance

n c l u d e s

any

o m p e t i t i v e

event where

h e


do

not

have s ome

d i r e c t

i n f l u e n c e

over

h e

outcome

of

h e

game.

NYAG

r.

26.

The

NYAG

i t e s

no

New ork

a s e s

o r

s t a t u t e s

i n

s u p p o r t

of

h i s

p o s i t i o n .

The

t a t u t o r y

d e f i n i t i o n

of

c o n t e s t

of

hance

does

not

even

mention

i n f l u e n c e ,

mu c h

e s s

d i r e c t

i n f l u e n c e .

Even

where §

225.00

speaks

of

i n f l u e n c e

i n

t h e

f u t u r e

c o n t i n g e n t e v e n t

prong

of

h e

d e f i n i t i o n

of

gambling

a d d r e s s e d

i n

S e c t i o n B

e l o w ) ,

t

does not

e q u i r e t h a t

t h e

i n f l u e n c e

be

d i r e c t .

Because

New

ork

Penal

Law§

25.00(2)

makes

no


b a s e d

on

a

o n t e s t a n t ' s

d i r e c t

i n f l u e n c e

over

h e game,

h e NYAG

s wrong

n

a s s e r t i n g

t h a t

t h e

supposed

absence of

d i r e c t

i n f l u e n c e

by

a n t a s y

s p o r t s

c o n t e s t a n t s i s

c r i t i c a l

t o

t h e

i n q u i r y .

NYAG

r. 26.

I n

any

e v e n t , a s

e x p l a i n e d

23



below,

a i l y

f a n t a s y

s p o r t s


e x e r c i s e

s i g n i f i c a n t

i n f l u e n c e

o v e r t h e

outcome

of h e

c o n t e s t s .

The

NYAG s

s s e r t i o n t h a t

D r a f t K i n g s '

b u s i n e s s

s t r a t e g y

and

m a r k e t i n g

i s

perhaps

t h e

most

e l l i n g

i n d i c a t i o n

t h a t

FanDuel and

D r a f t K i n g s

run

gambling

o p e r a t i o n s

(NYAG

r.

32)

oes

n o t h i n g

t o

prove

d a i l y

f a n t a s y

s p o r t s

a r e

i l l e g a l

gambling.

No n e

of

h e

e l e m e n t s

o f

e c t i o n

225.00

e q u i r e

an

a s s e s s m e n t

of


b u s i n e s s and

m a r k e t i n g

s t r a t e g i e s .

The

law

l o o k s

t o

t h e

n a t u r e

of

h e

c o n t e s t

i t s e l f ,

not o

h o w

t

i s

m a r k e t e d .


a c t i v i t i e s

i n

d i f f e r e n t

u r i s d i c t i o n s ,

s u b j e c t

t o

d i f f e r e n t

gambling

laws,

ay

n o t h i n g

about


compliance

w i t h New

ork law.

For

example,

h e

NYAG

d m i t s

t h a t t h e

I l l i n o i s

A t t o r n e y

General

o p i n i o n

t h a t he

f i l e d

w i t h

t h i s

Court

on

December 30,

2015

c o n s i d e r s t h e

s t a t u s

ofDFS

nder a

law

t h a t

p r o h i b i t s

an y

g a m e

of

chance

or

k i l l f o r

money.

Dec.

30,

2015

NYAG

e t t e r

a t

1

(emphasis

a d d e d ) .

The

l l i n o i s

o p i n i o n

cannot

u p p o r t

t h e

NYAG s

o s i t i o n

w he n

t

d i d not

o n s i d e r

whether DFS

o n t e s t s a r e

c o n t e s t s

of

k i l l s

See

l l .

A t t ' y

G e n .

O p .

t 9 .

Moreover, t

b e a r s

n o t i n g

t h a t

h e r

o p i n i o n

n o t w i t h s t a n d i n g ,

t h e

I l l i n o i s

A t t o r n e y

General

has

a g r e e d t o

a l l o w

DraftKings

o

c o n t i n u e

o p e r a t i n g

i n

5 Even f

t had,

uch

o p i n i o n s

a r e

a d v i s o r y ,

not

b i n d i n g

o n

h e

c o u r t s ,

and

a r e

e n t i t l e d

t o

be

c o n s i d e r e d o n l y

t o t h e

e x t e n t

t h a t

t h e y

a x e

w e l l

r e a s o n e d .

B u r r i s

v .

W h i t e ,

901

N.E.2d

895,

99

I l l . 2 0 0 9 ) .

Not

n l y

does

D r a f t K i n g s

d i s p u t e

t h e

I l l i n o i s

A t t o r n e y

G e n e r a l ' s

r e a s o n i n g ,

b u t

t

h a s

s o u g h t a

c o u r t

o p i n i o n o n

h e

m a t t e r

a l o n g

w i t h

FanDuel

and

Head2Head

a

company

h a t

p r o v i d e s

season

- l o n g f a n t a s y

c o n t e s t s ) .

24



t h e

s t a t e w h i l e a

o u r t

d e c i d e s

t h e

m e r i t s

of e r

o p i n i o n .

See

S u p p l .

S c h i l l e r

A f f . ,

Ex. .

T h i s

s t a n d s

i n

s t a r k

c o n t r a s t t o

t h e

NYAG's

x t r a o r d i n a r y

e f f o r t s

t o

s h u t

down

r a f t K i n g s ' b u s i n e s s b e f o r e p r o v i n g

i t s

c a s e i n

an


h e a r i n g .

B.

Daily

Fantasy

Sports

Contests

Do

ot

Depend

upon

a

Future

Contingent

Event

Outside

the

C o n t e s t a n t s '

Influence

or

Control.

I m p l i c i t l y

r e c o g n i z i n g

t h e

v u l n e r a b i l i t y of h e r i a l

c o u r t ' s

h o l d i n g

t h a t d a i l y

f a n t a s y

s p o r t s a r e

c o n t e s t s

of

hance,

h e

NYAG

e l l i n g l y

opens

t s

b r i e f

w i t h an

argument

h e c o u r t d i d

not

even

d d r e s s :

t h a t

d a i l y

f a n t a s y

s p o r t s

amount

o

gambling

b e c a u s e t h e

f a n t a s y

c o n t e s t a n t

s t a k e s

o r

r i s k s

something

of

a l u e

upon

t h e

outcome of ..

a

u t u r e

c o n t i n g e n t

e v e n t

not

under

h i s

c o n t r o l

o r

i n f l u e n c e ,

under

New

ork

Penal

Law§

2 5 . 0 0 ( 2 ) .

See

NYAG

r.

2,

18

- 2 2 .

T he r i a l

c o u r t

had

good

e a s o n

f o r

d e c l i n i n g

t o

a c c e p t t h i s

t h e o r y .

The

u g g e s t i o n t h a t

DFS

ames

i n g e on

t h l e t i c

p e r f o r m a n c e s

t h a t

t h e

f a n t a s y

p l a y e r

n e i t h e r

c o n t r o l s

nor

n f l u e n c e s

(NYAG

r.

20) s

wrong

b e c a u s e

S e c t i o n

225.00

p e a k s only

of a

i n g u l a r f u t u r e

c o n t i n g e n t

e v e n t ,

not

u l t i p l e

a t h l e t i c

p e r f o r m a n c e s .

Moreover,

h e NYAG

i s i d e n t i f i e s

t h e

f u t u r e

c o n t i n g e n t

event

upon

which

d a i l y

f a n t a s y

c o n t e s t s

depend.

The

outcomes

of a i l y

f a n t a s y

s p o r t s

c o n t e s t s

do not

depend

on

any

one

e a l- w o r l d

t e a m ' s

winning

o r

any

e a l -

l i f e

a t h l e t e s '

s u r p a s s i n g

p a r t i c u l a r

benchmarks of

erformance

such a s

throwing

a

touchdown

o r

h i t t i n g

a

homerun)

r

even

upo n any

one

e a l

l i f e

a t h l e t e ' s

2 5



pe

rfo

rma

nce

.

Ro

bin

s A

f£ ¶¶

8,

1 .

I n

s t e

a d , d a i

l y f

a n t

a s y

s p o

r t s

co

mpe

tit

ion

s

a r e

de

cid

ed

b

ase

d

o n

t

h e r e l a

t i v

e s

t r e

n g t h

o f

h e

co

mpo

sit

e

s t a t

i s t i

c s

g e n

e r a

t e d

b

y

t h e

l i n e u p s s e l e c t e d

by

t h e f a n t a s y c o n t e s t a n t s

—whi h ear

n o

r e l a

t i o n

t o

a n

y

r

e a l -

wor

ld s

p o r t

s

t e

am.

Se

e

sup

ra

pp

.

1

0 . I

n

s

h o r

t ,

t h e

f

u t u r

e

c o

n t i

n g e

n t

ev

ent

up

o n

wh

ich

t h e

o u

t c o

m e o f

a

i l y

f a

n t a

s y

s p o

r t s

c o

m p e

t i t i

o n s

d

e p e

nd

i s

t h

e

com

pet

iti

on

be t

we e

n tw

o o

r

m

o r e

f a

n t a

s y

t ea

ms.

Fa

nt a

sy

c o

n t e s

t a n

t s

i n d

i s p

u t a b

l y

e

x e r

c i s e

s

i g n

i f i c

a n t

c o

n t r o

l or

i n

f l u e

n c e

o

ver

t

h e o u

t c

o m e

o

f

h

e i r

com

pet

itio

ns

w i

t h i

n

t h e

m e a n ing

o f

e c t i o n

225.00(2)

by

s e l e

c t i

n g

a p a

r t i

c u l a

r

f a n

t a s

y

l i n

e u p

am

ong

h

e

b

i l l i

o n s

o f

o s s i

b l e

l

i n e

u p s

t h a t

cou

ld

be

g e

n e r

a t e d

.

Ro

bin

s

Af

f.~

1

.

Th

at

s

t

h e onl

y

e x p

l a n

a t i o

n f o r

w

hy

sm

all

g

rou

p

o f

a n t a

s y

c o

n t e

s t a n

t s

ca n

c o n

s i s

t e n t

l y

o

utp

erf

orm

b

oth

r

a n d

o m l

y g

e n e

r a t e

d

l i

n e u

p s

a

n d

o t

h e r ,

e s

s

s k i l

l e d

f a n

t a s

y c

o n t e

s t a

n t s :

t h

e

j u

d g r

r i e n

t

a

n d

s

k i l l

o f

h e

c o n

t e s

t a n t

s hav

e

a

m a t e

r i a

l

i

n f l

u e n c

e o n

t h e

ou

t c o

m e .

Se

e

s

upr

a

pp

. 8

-

9 .

T

he

NY

G

f f

e r e

d

n

o e

vid

enc

e s

u p p

o r t

i n g

t s

c

lai

m

t

h a t

DF

S a m

e s

h

ing

e

o n

a t h

l e t i

c

p

erf

orm

anc

e t h

a t

t

h e

f

a n t a

s y

p l a

y e r

n

e i t

h e r

c o

n t r o

l s

nor

i n f

l u e n

c e s

N

Y

G

r

.

2

0. I n

c o

n t r a

s t

the

r e c

o r d

(

i n c

l u d

i n g

t h

e

NY

AG

's

o

wn

ubm

iss

ion

her

e)

s r

e p l e

t e

wi

th evi

den

ce

c o

n c l

u s i

v e l y

e s t

a b l i

s h i

n g

t h a

t f a n

t a s

y

c o n t

e s t

a n t s

e x e r

t

m a

t e r

i a l

i n f

l u e

n c e

o n

t

he

o ut

c o

m e

o f

a

i l y

f a

n t a

s y s

p o r

t s

c o n

t e s

t s .

Se

e

Fi

gue

red

o

A f f i

r m .

, Ex

.K

1 T

he

c h

a l l

e n g

e '

o

f

DF

S

—a

nd

h e s k

i l l

s e t

r

e q u

i r e d

t o

p

lay

DF

S

u c c e

s s f

u l l

y

—

has

b

s o l u

t e l

y

n

oth

ing

t o

d

o

wi

th

c

o r r

e c t l

y

26



p r e d i c t i n g

t h e

u l t i m a t e

win

- l o s s

outcome o r

margin

of

i c t o r y of

a s k e t b a l l

g a me

o r s o c c e r

match.

I n s t e a d ,

t h e

r e l e v a n t

s k i l l

s e t

i n v o l v e s

a c c u r a t e l y

p r o j e c t i n g

t h e

performance

of

n d i v i d u a l

a t h l e t e s

and

t r a t e g i c a l l y

a s s e m b l i n g

i n d i v i d u a l

a t h l e t e s

i n t o

o p t i m a l

l i n e u p s

g i v e n t h e

c o n s t r a i n t s

of

h e

s a l a r y

cap

and

t h e

payout

t r u c t u r e

of

h e

c o n t e s t .

) ;

Figueredo

A f f i r m . ,

Ex.L

¶

0

d a i l y

f a n t a s y

s p o r t s

rewards

p l a y e r s

w h o u s e

c r e a t i v e

and

s t r a t e g i c

t h i n k i n g i n

a s s e m b l i n g t h e

b e s t

team

w h i l e

s t a y i n g

under

budget

) ;

Figueredo

A f f i r m . ,

Ex.

a t 1

( e x p l a i n i n g

h o w

t r a t e g i e s

employing

c o v a r i a n c e

i n f l u e n c e

t h e

outcome

of

a n t a s y

c o m p e t i t i o n s ) .

The

i n f l u e n c e

e x e r t e d b y

a n t a s y


n e g a t e s t h e

argument

h a t

d a i l y

f a n t a s y

s p o r t s

amounts

o

gambling

under

S e c t i o n

2 2 5 . 0 0 ( 2 ) .

Th e

NYAG s

l a i m

t h a t

t h e

i n f l u e n c e

must be

d i r e c t

(NYAG

r.

26)

r

p h y s i c a l [

]

(Op.

6)

a n u f a c t u r e s

r e q u i r e m e n t s

found

nowhere

i n

t h e

s t a t u t o r y

t e x t .

Where an

Attorney-

G e n e r a l ' s

s u g g e s t e d

i n t e r p r e t a t i o n

i s

wholly

a t odds

w i t h

t h e

wording

of

t h e

s t a t u t e

and

would

r e q u i r e

t h e

Court t o

r e w r i t e

t h e

s t a t u t e ,

t h e

Court

cannot

adopt

such

an

i n t e r p r e t a t i o n .

People v .

Smith,63

N.Y.2d

41,

79

1 9 8 4 ) .

The

NYAG s

rgument

h a t

c o n t e s t a n t s do

not

n f l u e n c e

t h e

outcome

because t h e i r

l i n e u p s a r e

locked

(NYAG

r. 10)

a i l s

f o r t h e

sa me

r e a s o n .

That

t h e


i n f l u e n c e

o c c u r s

a t t h e

b e g i n n i n g

r a t h e r

t h a n t h e

end

of

h e

c o n t e s t

does

not

mea n

h a t

t h e r e

i s

no

i n f l u e n c e

a t a l l I n

f a c t ,

m a n y

g a mes

of

k i l l

work

t h i s

wa y .

Season

- l o n g

f a n t a s y

s p o r t s


lock

in

h e i r

s e l e c t i o n s

b e f o r e

27



each

weekly

c o m p e t i t i o n .

Th e

owners

of s h o w

dogs

a r e

locked

once

t h e


b e g i n s ;

w h i l e t h e

h o u r s

of

r a i n i n g and

grooming

b e f o r e t h e

s h o w

i n f l u e n c e

t h e

l i k e l i h o o d

of

u c c e s s ,

t h e

owner

cannot

c o n t r o l

what

h e

dog

does

d u r i n g

t h e

show.

In l l

t h e s e

c a s e s ,

t h e

f a c t

t h a t

i n t e r v e n i n g

a c t o r s o r

phenom en a

can

e x e r t an

i n d e p e n d e n t

i n f l u e n c e

between

t h e

m o m e n t a

c o n t e s t i s

locked

in

and

t h e

m o m e n t

h e

winners)

r e

announced

does not

l i m i n a t e

t h e

i n f l u e n c e

t h e

c o n t e s t a n t

e x e r t s

o n h e

c o n t e s t

a s a

whole.

Nothing

i n t h e

s t a t u t e

r e q u i r e s

t h a t

i n f l u e n c e

be

e x e r t e d

t h r o u g h o u t

a l l

p h a s e s

of

h e

c o n t e s t .

R e w r i t i n g

a

s t a t u t e i s

f o r b i d d e n

under

any

c i r c u m s t a n c e

—but h e

r e w r i t i n g

of

r i m i n a l

s t a t u t e s

( l i k e

S e c t i o n

225.00)

o s e s

s p e c i a l

d a n g e r s .

Under

h e

r u l e

of

l e n i t y ,

[ i ] f

t w o

c o n s t r u c t i o n s

of

a

c r i m i n a l

s t a t u t e

a r e

p l a u s i b l e , t h e

one

more

f a v o r a b l e

t o t h e

d e f e n d a n t

s h o u l d

be

a d o p t e d .

People

Golb,

2 3

N.Y.3d

455,

468

2014)

c i t a t i o n o m i t t e d ) ;

see

a l s o ' S k i l l i n g

v

U n i t e d

S t a t e s , 561

U.S.

358,

10-

11

(2010).

Here,

r a f t K i n g s '

p o s i t i o n

— t h a t

a

c o n t e s t a n t

need

o n l y

e x e r c i s e

a

m a t e r i a l

d e g r e e

of

n f l u e n c e

over

h e

outcome of

h e


t o

a v o i d

v i o l a t i n g

t h e

gambling

law

—is

p l a u s i b l e

i n t e r p r e t a t i o n of h e

s t a t u t e , and

t

has

been

embraced b y

m a n y

c o u r t s .

By

o n t r a s t ,

t h e

NYAG s

n t e r p r e t a t i o n

would

e f f e c t i v e l y

r e w r i t e

S e c t i o n

225.00

o

r e q u i r e


e x e r t

d i r e c t

o r

p h y s i c a l

i n f l u e n c e

throughout

l l

p h a s e s of

h e

game.

T he r u l e

of

e n i t y

r e q u i r e s

t h e

Court

o

r e j e c t

t h i s

a b r u p t

e x p a n s i o n

of

h e

s t a t u t e t o

a p p a r e n t l y

28



innocent

conduct,

s u b j e c t i n g

t o

c r i m i n a l

jeopardy

those who

f f e r a n

immens ely

popular

a n d

beloved

game

t h a t

h a s

long

b e e n

widely

understood t o

b e

l a w f u l .

Liparota

v .

United

S t a t e s ,

471

U.S.

419,

426-27

1985).

C.

DraftKings

Contestants

Do

No t Stake

o r

R i s k

Som e t h i ng

o f

Value

o n

t h e

O u t c o m e

o f

Daily

Fa n t a s y

Sports

Contests.

T h e

r i l

c o u r t a l s o

e r r e d b y

concluding

t h a t DFS

o n t e s t a n t s

stake[

r

r i s k [

]something o f

alue

u p o n

the

o u t c o m e o f

h e

c o n t e s t

under

New

York

Penal

Law

e c t i o n

225.00(2)

b y

paying

e n t r y

f e e s

t o

c om p e t e i n

d a i l y

f a n t a s y

s p o r t s

c o n t e s t s .

Op.

4

- 7 .

New

York

c o u r t s

h a v e

held f o r

m o r e

than

a

century

t h a t

t h e r e i s a


between

the

w o r d s

bet or

wager

a n d

t h a t w h i c h

i s

c o n v e y e d

b y

t h e

term

p u r s e s ,

p r i z e s ,

a n d

prem i um s

a

i s t i n c t i o n

w h i c h

h a s

b e e n

adopted

s o

f a r

as we

c a n

d i s ~ ~ ~ e r

i i i ~v v

°iy

w . c i v

i i i

::~h:~h

the ~,µ~etinn

hac hPPn rai~P~l

i n

t h i s ~ n » n t r v ,

People

ex

r e l .

L a w r e n c e v .

Fallon,

4 .D.

82,

8 8

l s t

Dept

896)

In

h i s

b r i e f o

t h i s

Court

h e NYAG

oncedes

t h a t

Fallon

held

t h a t

a

h o r s e

o w n e r

d i d not

engage i n

i l l e g a l

gambling b y

e n t e r i n g h i s

h o r s e

i n t o

a r a c e

w i t h

an

e n t r y

f e e

an d a

p r i z e .

NYAG

i r .

27

n .

0 .

In t h e

NYAG s r i e f

o

t h e t r i l

c o u r t

i t

t r i e d

t o

d i s t i n g u i s h

Fallon

b y

s a y i n g :

The

New York

Court o f

Appeals

h e l d

t h a t

t h e

competing

p a r t i e s

were

not

gambling.

Thus,

paying

t o

e n t e r

your

own

o r s e i n

t h e

B elmont

S t a k e s

i s

not

gambling,

but b e t t i n g

b y

s p e c t a t o r s

and

o t h e r

t h i r d

p a r t i e s

o n

t h e

r a c e

i s

gambling,

l b e i t

gambling

t h a t i s

c u r r e n t l y

exempted

under t h e

law.

~~



NYAG

r.2

Nov.

23,

015).

However,

h a t

argument a i l s

because

t h e

c ompeting

p a r t i e s

i n

a DFS

o n t e s t

a r e

t h e DFS

o n t e s t a n t s

who

ay an

e n t r y

f e e

and compete

o r

a

p r i z e .

In

t s b r i e f

t o

t h i s

Court,

NYAG

ow

r i e s

t o


Fallon b y

a s s e r t i n g :

The

horse

owner

e t a i n e d some

degree of

o n t r o l and

i n f l u e n c e

over

t h e

performance of

i s

horse

on

t h e

t r a c k

through

i s

choice of a

r a i n e r ,

a

jockey,

t c .

—even

hough

chance

undoubtedly

played

some

o l e

i n

t h e

outcome of

h e

r a c e

i t s e l f

NYAG

r.27

. 1 0

Dec.

22,

2015).

That

argument

l s o

f a i l s

because

u s t a s

a

horse

owner

e x e r c i s e s

c o n t r o l

and

i n f l u e n c e

over

whether

h e

owner

wins a

r i z e

b y

h e

owner's

choice of a

r a i n e r ,

a

ockey,

t c .

,DFS

o n t e s t a n t s

e x e r c i s e

even

more

c o n t r o l

and

n f l u e n c e

over

whether

they win

a

p r i z e

b y

h e i r

choice

of

a

r o s t e r .

While no

horse

owner

wins

anything

c l o s e

t o

a

m a j o r i t y

of

i s or

her

r a c e s ,

S~CiiiVU

L~~Ci

v̂ vi~

v~~i.uii~~

;~~ .~~~,~

~:~ii:

~',~r~tact

after

~nntPCt,

The

u l e

i n

Fallon

remains

good

law.

For

example, n

Humphrey

.

Viacom,

I n c . , No.

6

-cv

-2768,

2 0 0 7

WL

797648

(D.N.J.

June 20,

007),

h e

c o u r t

r e j e c t e d

a

claim

t h a t

aseason

-long

a n t a s y

s p o r t s

p r o v i d e r

t h a t

charged

e n t r y

f e e s

and

awarded

p r i z e s was

an

l l e g a l

gambling

o p e r a t i o n .

Courts

have

d i s t i n g u i s h e d

between

bona

fzde

e n t r y

f e e s

and

b e t s

or

wagers,

holding

t h a t

e n t r y

f e e s do

not

c o n s t i t u t e

b e t s or

wagers

where

they

a r e

p a i d

u n c o n d i t i o n a l l y

f o r

t h e

p r i v i l e g e of

p a r t i c i p a t i n g

i n

a

c o n t e s t ,

and

t h e

p r i z e i s

f o r

an

amount

c e r t a i n

t h a t

i s

guaranteed

t o be

won y

one

of

h e


(but

not

h e

e n t i t y

o f f e r i n g t h e

p r i z e ) .



I d .

a t

.

Although

t h e

t r i a l

c o u r t

below c o r r e c t l y

n o t e d

t h a t

Humphrey

n v o l v e d

New

e r s e y ' s

gambling

s t a t u t e ,

t h e

New

e r s e y

s t a t u t e i s

s u b s t a n t i a l l y

i d e n t i c a l

t o

New

o r k ' s .

Moreover,

h e

c o u r t

dodged

t h e

c e n t r a l

i s s u e :

b o t h

Humphrey

and

Fallon

r e c o g n i z e t h a t

c o n t e s t s

i n v o l v i n g

bona

i d e

e n t r y

f e e s a r e

not

gambling.

The

r i a l

c o u r t

d i d

not

even

c i t e

F a l l o n , e t a l o n e


i t

A n d

w i t h

good

r e a s o n :

t h e

d e c i s i o n

below

d i r e c t l y

c o n f l i c t s

w i t h F a l l o n .

The

e n t r y

f e e s

DraftKings

c h a r g e s

a r e

i n d i s t i n g u i s h a b l e

from

t h e

bona

i d e

f e e s

c h a r g e d by

h e

d e f e n d a n t s

i n

Humphrey

and F a l l o n .


f e e s

a r e

p a i d

u n c o n d i t i o n a l l y ,

r e g a r d l e s s

o f

h e

outcome

o f any

c o n t e s t ,

and

DraftKings

r e t a i n s

a

p o r t i o n o f

h e s e

payments

a s

compensation

f o r

p r o v i d i n g

d a i l y

f a n t a s y

c o n t e s t s

t o

i t s

c u s t o m e r s .

A s o r

t h e p r i z e s ,

DraftKings

announces

i n

advance

t h e

e x a c t

amount

h e

winners

w i l l

r e c e i v e . In

s h o r t ,

t h e s e a r e

bona i d e

e n t r y

f e e s

j u s t

a s

i n

Humphrey

and

F a l l o n ,

and

t h e

NYAG

as no

e v i d e n c e

o t h e r w i s e . 6

The

r i a l c o u r t

m i s a p p l i e d

New

ork

law i n

s t a t i n g

t h a t

D r a f t K i n g s ' f e e s

a r e

not

bona

i d e e n t r y

f e e s

b e c a u s e

t h e

p a r t i c i p a n t s pay

a

e e

e v e r y

time t h e y

p l a y ,

p o t e n t i a l l y

m u l t i p l e

t i m e s

d a i l y

i n s t e a d

of

one

s e a s o n a l e n t r y

f e e , w i t h a

p e r c e n t a g e

6

The

p r e j u d i c e

r e s u l t i n g

from

t h e C o u r t ' s

r e f u s a l

t o

h o l d

an


h e a r i n g

i s

a p p a r e n t

from t h e

C o u r t ' s

fundamental

m i s u n d e r s t a n d i n g

o f h o w

D r a f t K i n g s

o p e r a t e s

and

h o w

e n t r y

f e e s

a r e

c a l c u l a t e d . For

example,

o n t r a r y

t o

a l l

t h e e v i d e n c e ,

h e

c o u r t s t a t e d

t h a t

t h e

amounts

of

t h e

e n t r a n c e f e e [ t o

e n t e r

a

DFS

o n t e s t ] s

c a l c u l a t e d

i n

p a r t

o n s a l a r y

capped

s i c ]

a t up

o

$ 5 0 , 0 0 0 . 0 0

and

o n

h e

a t h l e t e s

p e r c e i v e d

v a l u e .

(Op.

t 5)

I n r e a l i t y ,

c o n t e s t

e n t r a n c e

f e e s

have

n o t h i n g t o do

w i t h

t h e s a l a r y

c a p s

imposed o n h e

game

and t h e

s a l a r y

e a c h

c o n t e s t a n t

must

pay

o

p l a c e

t h e

a t h l e t e

o n

h i s

r o s t e r . Robins

A f£ ¶¶ 1 0 ,

12

- 1 4 .

31



of

very

e n t r y f e e

being

paid o

...

r a f t k i n g s ,

I n c .

Op.

.

DraftKings'

n t r y

f e e s

a r e j u s t

as

on e

t ime

a s

the

f e e s

charged b y

h e

season

- l o n g

f a n t a s y

s p o r t s

p r o v i d e r s

i n

Hum ph r e y.

I d .

In

both season

-long

an d d a i l y

f a n t a s y

s p o r t s ,

one

e e

i s

charged

p e r

c o n t e s t .

T h e

only

d i f f e r e n c e

i s t h a t

d a i l y

f a n t a s y

s p o r t s

c o n t e s t s

a r e

s h o r t e r .

But

New

ork l aw

does not

look

to

t h e

d u r a t i o n

or

frequency

of

a m e p l a y

i n

determining

whether

a n

e n t r y

f e e i s

bon a

i d e . These

a c t s

h a v e n o

e g a l

s i g n i f i c a n c e .

I I .

D r aft K i n g s

Will

Suffer Substantial

And

rrep a ra b le

Harm

A b s e n t A ta y.

DraftKings

w i l l

b e

s e v e r e l y

a n d

i r r e p a r a b l y

h a r m e d

absent a

t a y .

T h e

r i a l

c o u r t ' s

o r d e r

e n j o i n s

DraftKings

from

o p e r a t i n g i n

New

or k

—one

f

t s

l a r g e s t

markets,

with

375,000

customers.

These

customers

h a v e p a i d

mo re

than $99

m i l l i o n

i

iiLiy

f~°+°Ja

i t r i

t~.v~i

~

~viiviufi.iii~

iiiniP 'hµti li

~~

~Y~lyi~linn

tYl

Y PVP1l17P., ~jl(lllt~

DraftKings

cease

o p e r a t i o n s i n

New

ork, t

w i l l s u f f e r

s e v e r e

economic

h a r m

with n o

a b i l i t y

t o

recover

d a m a g e s

from the

NYAG.

DraftKings

would

a l s o

r i s k

l o s i n g

t h e

support

of

t s

i n v e s t o r s

a n d

t s

f u n d r a i s i n g

e f f o r t s

would be

s e v e r e l y

hampered.

raftKings

h as

a r t n e r e d

with

~

The

r i l

c o u r t n o t e d

t h a t DraftKings

h a x g e s

e n t r y

f e e s a s

h i g h

a s

$1

0 , 6 0 0 . 0 0

on

one o r more

c o n t e s t s .

Op.

.

This

a c t a l s o l a c k s

l e g a l

s i g n i f i c a n c e , a s

t h e

s i z e

of n

n t r y

f e e

has no

b e a r i n g

on

whether a n

a c t i v i t y

c o n s t i t u t e s

gambling.

In a ny

v e n t , t h e

v a s t

m a j o r i t y of


New ork

s e r s

h a ve

never l a y e d

a

o n t e s t

w i t h a n

n t r y f e e

e x c e e d i n g

$20.

K a r m i t i s

Af£

~

4 ( a ) .

3 2



major

s p o r t s

e n t i t i e s

such a s

Fox

S p o r t s ,

Major

League

B a s e b a l l , t h e

N a t i o n a l

Hockey

League,

Major League

S o c c e r , and

t h e

owners o f

h e

New ork

Yankees,

New

ork

G i a n t s ,

New ork

Knicks,

New

ork

Mets,

New

ork Rangers,

and

New

ork

C i t y F.C.

See

Robins

A f f . ¶ .

A c o u r t

-

o r d e r e d

shutdown

would

c h i l l

and

c u r t a i l


a b i l i t y t o

a t t r a c t

n e w

n v e s t o r s

and

p a r t n e r s ,

and

would

j e o p a r d i z e


r e l a t i o n s h i p s

w i t h

t s

e x i s t i n g

i n v e s t o r s

and

p a r t n e r s .

A l l o f

t h i s

h a r m

would

not be

c o n f i n e d t o

New

ork,

u t

would

c a u s e a

c a s c a d i n g

e f f e c t

t h r o u g h o u t

t h e

country—

i n c l u d i n g

i n

t h e

dozens

o f

t a t e s

where

D r a f t K i n g s

a l s o

c o n t i n u e s

t o

o p e r a t e

lawfully—

t h r e a t e n i n g

t s

customer

b a s e

and

t s

b u s i n e s s

r e l a t i o n s w i t h

v e n d o r s ,

c u s t o m e r s ,

and

r e g u l a t o r s .

The

d e v a s t a t i o n

wrought

by

a

o r c e d

shutdown

would

be

p a r t i c u l a r l y

u n r e a s o n a b l e

g i v e n t h a t

New

ork

l e g i s l a t o r s

have

n t r o d u c e d

l e g i s l a t i o n

t o

e n s u r e

t h a t DFS

o n t e s t s

remain

l e g a l

i n

t h i s

s t a t e . See

Michael

V i r t a n e n ,

K e y

NY

lawmaker

e e s

s t a t e

l e g a l i z i n g

d a i l y

f a n t a s y

s p o r t s ,

A s s o c i a t e d P r e s s

(Dec.

8,

2015),

t t a c h e d

a s

Ex.

o

t h e

S u p p l .

S c h i l l e r A f f .

New

ork

c o u r t s

have

found


i n j u r y

where a

p a r t y

w i l l

l i k e l y

s u s t a i n a

l o s s

of

u s i n e s s

i m p o s s i b l e ,

o r

v e r y

d i f f i c u l t , t o

q u a n t i f y . W i l l i s

o f

New

Y o r k , I n c .

v .

DeFelice,

299

A.D.2d

240, 2 4 2

l s t

Dept

0 0 2 ) .

I r r e p a r a b l e

i n j u r y

w i l l

a l s o

be

found where

a

company s

r e v e n u e s

and

customer

g o o d w i l l a r e

t h r e a t e n e d .

See

Second

o n

Second

C a f e ,

I n c .

v . Hing

Sing

T r a d i n g ,

I n c . , 66

A.D.3d

33



255,

272

-73

1 s t

Dept 009)

f i n d i n g


i n j u r y

where a

company's

i n a b i l i t y t o

o p e r a t e

j e o p a r d i z e d

b u s i n e s s

l i c e n s e s ,

damaged

r e v e n u e s ,

harmed

customer

g o o d w i l l ,

and

meant

h e l o s s

of

a

e a l

e s t a t e

i n v e s t m e n t ) ;

see

a l s o

Four

Times

Square

s s o c s . ,

L . L . C .

v .

Cigna

n v s . , I n c . ,

306

A.D.2d

4,

. 1 s t

Dept

003)

( f i n d i n g


harm

where

customer

g o o d w i l l

and

b u s i n e s s

c r e d i t w o r t h i n e s s

t h r e a t e n e d ) .

Indeed,New

ork

c o u r t s

have

s t a y e d

a

r e l i m i n a r y

i n j u n c t i o n

pending

a p p e a l

where t h e

i n j u n c t i o n

would

s h u t

d o w n

a

company's

n t i r e

b u s i n e s s

w i t h i n t h e

s t a t e ,

where

t h e

company

had

a l r e a d y

been

o p e r a t i n g

f o r s e v e r a l

y e a r s .

S e e , e . g . ,

C i t y o f

o c h e s t e r v .

S c i b e r r a s ,

5 5

A.D.2d

849,

849

4 t h

Dept

976)

( s t a y i n g and

u l t i m a t e l y

r e v e r s i n g

g r a n t

of

r e l i m i n a r y

i n j u n c t i o n

a g a i n s t

sewer

c l e a n i n g

company

o p e r a t i n g

w i t h o u t a

i c e n s e

b e c a u s e

t h e

company

had

o p e r a t e d

l a w f u l l y i n

t h e

c i t y

f o r

s e v e r a l

y e a r s

and t h e r e

was

n o

v i d e n c e

of

mmediate

i n j u r y t o

t h e

c i t y

o r i t s

c i t i z e n s

from

running t h e

b u s i n e s s ) .

I f

o r c e d t o

s h u t

d o w n

i t s New

ork

o p e r a t i o n s ,

DraftKings

w i l l

s u f f e r

immense

and

u n q u a n t i f i a b l e

economic

harm; t

w i l l l o s e

g o o d w i l l

among

t s

c u s t o m e r s

and

i n v e s t o r s

n a t i o n w i d e ;

and t

w i l l

endure

massive

r e p u t a t i o n a l

harm.

T h e

c a s e s c i t e d b y

h e

NYAG

—which o l d

t h a t

economic

o s s ,

which

i s

compensable

b y

m o n e y

damages,

does

not

o n s t i t u t e


harm,

DiFabio

.

Omnipoint

Comc'ns,

n c . ,

66

A.D.3d 635,

636

2d

Dep't

2009)

q u o t a t i o n

marks

and

c i t a t i o n s

o m i t t e d }

—are

a s i l y

d i s t i n g u i s h a b l e .

NYAG

r . 41.

None

of h e s e

34



c a s e s

i n v o l v e d

l i t i g a t i o n

between a

p r i v a t e

p a r t y

and h e

government.

See

d ;

N . Y .

C i t y Off

-Track

e t t i n g

Corp.

N. .

Racing

Assn,

n c . ,

250

A.D.2d 437,

442 1 s t

Dept

9 9 8 ) ;

SportsChannel

A m .

s s o c s .

v .

N a t ' l

Hoc k ey

League,

186

A.D.2d

417,

418 1 s t

Dept

9 9 2 ) . T h e

NYAG

f f e r s

n o

e a s o n

t o

b e l i e v e t h a t

D r a f t K i n g s

w i l l

be

a b l e t o

r e c o v e r

damages

a g a i n s t t h e

g o vernment n

t h e

e v e n t t i s

f o r c e d

t o

s h u t

d o w n

and h e


i n j u n c t i o n i s

l a t e r

r e v e r s e d .

While a

r i v a t e

p a r t y

t h a t

o b t a i n s

a


i n j u n c t i o n

o r d i n a r i l y

must o s t a

bo nd

t o

indemnify

t s

opponent

from

damages

caused

by

h e

i n j u n c t i o n ,

see CPLR 3 1 2 ( b ) ,

h a t

r e q u i r e m e n t

does not

a p p l y

h e r e .

T h e

economic

h a r m

i s

t h e r e f o r e

i r r e p a r a b l e .

I I I .

A

tay

Will

N o t

Prejudice

o r

Harm

he

P u b l i c .

No

ne

w i l l

s u f f e r

p r e j u d i c e

from

a

s h o r t

s t a y o f

h e


i n j u n c t i o n

o r d e r .

Daily

f a n t a s y

s p o r t s

c o n t e s t s

have

been

o f f e r e d

i n

New

o r k o r

n e a r l y

a

d e c a d e .

I f

h e NYAG

ad

e v i d e n c e

t h a t

t h e s e

c o n t e s t s

c a u s e ha rm

t o

t h e

p u b l i c , t

would

have

o f f e r e d

t h i s

e v i d e n c e

below.

I n s t e a d , h e

evidence h e

NYAG

e l i e s

u p o n was

n o t h i n g

m o r e

h a n

s p e c u l a t i o n and

i n a d m i s s i b l e

d o u b l e - o r

t r i p l e-

h e a r s a y .

For

example,

s i t s

s o l e

s u p p o r t f o r

t h e

p r o p o s i t i o n

t h a t

DFS

s

a d d i c t i v e

(NYAG

r. 9 ) ,

h e NYAG

r e l i e s

u p o n

h e

a f f i d a v i t

of an

e x p e r t

w i t n e s s

w h o o f f e r s

second-

and

h i r d

-hand

a c c o u n t s

from

s e v e r a l

u n i d e n t i f i e d

i n d i v i d u a l s

w h o

c l a i m

t o

have

spoken

o

o t h e r

u n i d e n t i f i e d

p e o p l e

w i t h

supposed D F S -

r e l a t e d

gambling

3 5



a d d i c t i o n s .

Figueredo

A f f i r m . ,

Ex.

1 s t a t i n g

t h a t

d e c l a r a n t

spoke

t o

s e v e r a l

r e c o v e r i n g

gamblers

and

gambling

c o u n s e l o r s

who have

e n c o u n t e r e d

p e o p l e w i t h

DFS-

r e l a t e d

gambling

a d d i c t i o n s

) .

Such

vague

a s s e r t i o n s

a r e

n o t

o n l y

i n a d m i s s i b l e ,

b u t a l s o

nowhere

n e a r

s u f f i c i e n t

t o

s u p p o r t

an

a s s e r t i o n

t h a t

DFS

s

a d d i c t i v e t o

j u s t i f y

s h u t t i n g

D r a f t K i n g s

do wn. The

NYAG s

u r p o r t e d

e x p e r t does

not

even

c l a i m

t o

have

m e t

s o m e o n e who

b e l i e v e s he i s

a d d i c t e d

t o

d a i l y f a n t a s y

s p o r t s .

Be fo r e

mak i n g

f a c t u a l

f i n d i n g s

b a s e d

o n

e x p e r t e v i d e n c e , a

r i a l

c o u r t m u s t

d e t e r m i n e t h a t

t h e

methods

u s e d

b y

t h e

e x p e r t have

a c h i e v e d

g e n e r a l

a c c e p t a n c e

w i t h i n

t h e

s c i e n t i f i c

c o m m u n i t y

—and

h a t

t h e

e x p e r t

f o l l o w e d r e l i a b l e

p r o c e d u r e s

i n

t h e

p a r t i c u l a r c a s e .

See

Pa r k e r

M obil O i l

C o r p . ,7

.Y.3d

434,4 46

-47

(2006).

The

NYAG s

u r p o r t e d

e x p e r t d i d

n o t

c o m e

c l o s e

t o

s a t i s f y i n g

t h e s e

s t a n d a r d s .

A p p a r e n t l y

r e c o g n i z i n g

t h e

i n s u f f i c i e n c y

o f

t s

t r i a l

c o u r t

s u b m i s s i o n ,

h e

NYAG

o w

s e e k s t o

supplement

h e

r e c o r d

b y

c i t i n g t o

a

newspaper

a r t i c l e

t h a t

was

p u b l i s h e d

a f t e r

b r i e f i n g

below was

o m p l e t e d .

See

NYAG

r.

4 0 c i t i n g

F i g u e r e d o

A f f i r m . ,

Ex.

H). This

a r t i c l e

i s

not

p r o p e r l y

b e f o r e t h e

Court

and

s h o u l d

be

i g n o r e d ,

and t

i s rank

h e a r s a y . $

See

B r o i d a

v B a n c r o f t ,

1 03

A.D.2d

88,

93 2 d

8 The

r t i c l e

a t t a c h e d a s E x h i b i t

H

o

t h e

F i g u e r e d o A f f i d a v i t

a l s o

r e c o g n i z e s

t h a t

[ m ] o s t

p e o p l e

can

p l a y

d a i l y

f a n t a s y

o r c a s i n o

g a m e s

w i t h o u t

a

p r o b l e m .



Dept.

1984). There s

no

a d m i s s i b l e

evidence

s u p p o r t i n g t h e

NYAG s

s s e r t i o n

t h a t

g a r r ~ b l i n g

a d d i c t s

f i n d

the

r e a d i l y

a c c e s s i b l e

n a t u r e of

DFS

ames

i r r e s i s t i b l e .

NY G

r. 3.

Furthermore,

h e

NYAG s

n a c t i o n

a g a i n s t

p r o v i d e r s of

season

-long

f a n t a s y

s p o r t s

c o n t e s t s

—not

o

mention

p r o v i d e r s of

a i l y

c o n t e s t s

o t h e r

than

DraftKings

and

FanDuel—

undercuts h i s

a l l e g a t i o n s

of rgent

p u b l i c harm.

If h e s e

c o n t e s t s

t r u l y

posed a

grave t h r e a t

t o

p u b l i c

s a f e t y as

t h e

NY G

l a i m s , he

would not

have

s e l e c t i v e l y t a r g e t e d

only

two

companies

w i t h i n

a

a r

broader

n d u s t r y .

T h e

NYAG s

s s e r t i o n t h a t

g r a n t i n g

DraftKings'

motion would

r e s u l t

i n a

n u l l i f i c a t i o n

of t h e ]

Supreme

Court's


i n j u n c t i o n

(NYAG

r.

1 5)

misunderstands t h e

r e l i e f t h a t

i s a t

i s s u e .

This

motion does

not seek to

n u l l i f y

a n y t h i n g .

t a y

pending

appeal

would only

prevent h e

enforcement

of

h e

t r l

c o u r t ' s

e r r o n e o u s l y

i s s u e d


i n j u n c t i o n during

t h e

pendency

of h i s

a p p e a l .

If

h e

NY G

ere to

succeed

on

t h e

m e r i t s

of

h i s

a p p e a l , t h e s t a y

would

b e l i f t e d

and a


i n j u n c t i o n

would c o n t i n u e

pending

t h e

outcome

of h e

l i t i g a t i o n

below.

F i n a l l y ,

t h e

NYAG s

laim

t h a t

t h e

DFS

n d u s t r y i s

expanding

and t h u s

a

s t a y

would

not

p r e s e r v e t h e

s t a t u s quo

see

NY G

r.

43

-45)

s a b s u r d .

F i r s t , t h e

NY G

oes

not

o f f e r

any

evidence

of

raftKings'

u t u r e

expansion; he

only

s p e c u l a t e s

t h a t t h e

u s e r

base w i l l

grow

d u e

t o

a d v e r t i s i n g

and

continued

3 7



e n t h u s i a s m f o r

s p o r t s .

Moreover f

t h e

p o t e n t i a l growth

of

a

b u s i n e s s

d u r i n g

t h e

pendency

of an

a p p e a l c o u l d

some h o w

undermine t h e

s t a t u s

quo

no

a c t i v e

company

could

e v e r

s e c u r e

a

s t a y

pending

a p p e a l . Such

a

e s u l t

w o u ld d e f y

l o g i c .

Whether

D r a f t K i n g s

customer

b a s e

remains

s t a t i c i n t o t h e

f u t u r e

s h o u l d

n o t

a l t e r

t h e a n a l y s i s ,

p a r t i c u l a r l y where

DraftKings

i s

committed t o

p e r f e c t i n g

t s

a p p e a l

f o r t h e

A p r i l

Term

n s u r i n g

t h a t

any

s t a y

pending

a p p e a l would

be

b r i e f . 9

CONCLUSION

D r a f t K i n g s

motion

t o s t a y

p r o c e e d i n g s

pending

t h e

r e s o l u t i o n

of

t s

a p p e a l

s h o u l d be

g r a n t e d .

Dated:

New

ork

New

ork

J a n u a r y

4

2015

9 Th e NYAG

s k s

t h e

Court o

o r d e r

DraftKings o

p e r f e c t t s

a p p e a l

f o r t h e

A p r i l Term.

NYAG

r. t 4

. 1 ) . There i s n o

need

f o r

such

an o r d e r . Given

D r a f t K i n g s

d e s i r e

t o

r e s o l v e

t h e l e g a l i t y of

DFS o n t e s t s

o n an

e x p e d i t e d b a s i s ,

t

a l r e a d y

i n t e n d s

t o

p e r f e c t

t s a p p e a l

f o r t h e

A p r i l Term.

38



R e s p e c t f u l l y

submitted,

4

GIBSON D

RUTCHER

LLP

Randy

M. astro

Debra

Wong

Yang*

Avi

Weitzman

Tho ma s H.

upree,

r .

Alexander

H.

outhwell

Matthew

J .

Benjamin

200

Park

Avenue,

7th

Floor

New

ork,

New

York

10166

-0193

212)

51

-2400

1050

Connecticut

Avenue,NW

Washington,DC

0036

202) 55

-8500

BOIES,

SCHILLER

LEXNER

LLP

David

Boies

Jonathan

D.

c h ~ ~ l ~ r

Randall

W.

ackson

Joshua .

S c h i l l e r

Leigh M.

athanson

Benjamin

Margulis

John

T.

Nicolaou

333

Main

S t r e e t

Ar m onk ,

NY

0504

914) 4 9-8200

575

Lexington

Avenue,

t h

Floor

New

ork ,

New

York

10022-6138

212)

4 6

-23 0

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DraftKings Amended Lawsuit Response 0104

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