## Facts

- New York’s Constitution generally prohibits gambling, allowing only enumerated exceptions.
- Before 2016, New York Penal Law defined “gambling” as staking value on a “contest of chance,” meaning an outcome depending “in a material degree” on chance or a contingent event outside a player’s control.
- Interactive fantasy sports (IFS) contests require an entry fee to assemble rosters of real-world athletes; prizes depend on athletes’ statistical performance in actual games, which contestants cannot control.
- In 2016, the Legislature enacted Racing, Pari-Mutuel Wagering and Breeding Law Article 14 to regulate IFS, declaring IFS “do not constitute gambling” and are “not games of chance,” and creating a registration, consumer-protection, and taxation regime for IFS providers.
- State taxpayers sued for declaratory and injunctive relief, alleging that Article 14 unconstitutionally authorized gambling under N.Y. Const. art. I, § 9.
- The trial court held Article 14 unconstitutional to the extent it authorized and regulated IFS as lawful activity, but constitutional to the extent it excluded IFS from Penal Law article 225’s definition of “gambling.”
- Defendants appealed and plaintiffs cross-appealed.

## Issues

1. Whether Article 14’s authorization and regulation of IFS, and its declaration that IFS is not gambling, violates N.Y. Const. art. I, § 9.
2. Whether excluding IFS from Penal Law article 225’s definition of “gambling” is unconstitutional under N.Y. Const. art. I, § 9.

## Decision

- The court held Article 14 unconstitutional to the extent it affirmatively authorizes IFS contests as lawful activity because IFS constitutes gambling under the constitutional framework.
- The court upheld Article 14 to the extent it excludes IFS from the Penal Law definition of “gambling,” treating that provision as a permissible legislative choice to decriminalize conduct.
- The court accepted taxpayer standing and granted declaratory relief resolving the statute’s constitutionality.

## Legal Principles

- Statutes are presumed constitutional, and a challenger must prove unconstitutionality beyond a reasonable doubt; however, legislative labels cannot alter constitutional meaning.
- Where the Constitution broadly prohibits gambling with limited express exceptions, those exceptions are strictly construed.
- An activity may be a “contest of chance” even if skill is involved, so long as chance or contingent events outside the player’s control materially affect the outcome.
- The Legislature may decriminalize conduct by narrowing or redefining Penal Law offenses, but it may not, absent constitutional authorization, affirmatively legalize and regulate constitutionally prohibited gambling as a lawful enterprise.

## Conclusion

The court concluded that IFS outcomes materially depend on uncertain real-world athlete performance beyond contestants’ control, placing IFS within New York’s concept of gambling; therefore, the state could not constitutionally authorize and regulate IFS under Article 14, though it could remove IFS from Penal Law gambling crimes without violating the constitutional gambling prohibition.


White v. Cuomo, 181 A.D.3d 76, 118 N.Y.S.3d 775 (3d Dep’t 2020)