DraftKings - NY Supreme Court Brief

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DraftKings - NY Supreme Court Brief



DRAFTKINGS FILES OPPOSITION TO NEW YORK AG’S MOTION FOR PRELIMINARY INJUNCTION BOSTON, Mass., November 24, 2015 – DraftKings Inc., a leading destination for daily fantasy sports (DFS), today filed a brief in the Supreme Court of the State of New York opposing the New York Attorney General’s motion for a preliminary injunction preventing New York residents from playing fantasy sports games. DraftKings’ brief in opposition to the Attorney General’s motion underscores the fact that New York State law is the same today as it has been for the more than seven years that online Daily Fantasy Sports competitions have been enjoyed by New Yorkers. In fact, DFS contest providers such as DraftKings and FanDuel have openly operated in New York during the six years that the current New York Attorney General has been in office without a single suggestion from him or anyone else that their operations were at all legally suspect. Despite that long history, the New York Attorney General is now seeking to declare DFS to be illegal gambling. The opposition brief shows that DFS is as legal today as it has been for years and demonstrates that DFS competitions require more skill, and entail less chance, than seasonal fantasy sports, which the New York Attorney General recognizes as being perfectly legal under state law. This fact, and the other facts listed below, all demonstrate that the New York Attorney General’s arguments lack merit and that DFS competitions are legal in the state. Some key highlights from the opposition brief include:   

The NYAG seeks to declare DFS illegal gambling by relying on a conclusory expression of “concern” for consumer welfare, with no support from any statistical analysis or studies. New Yorkers have been playing daily fantasy sports legally for nearly ten years. The Attorney General is not entitled to unilaterally change the law. Any change in the law should come from the Legislature, not the Attorney General. For an activity to meet the legal definition of gambling under New York law, players must “stake or risk” something of value on the outcome of a contest or future event. DFS participants pay an entry fee to compete for fixed prizes. No court interpreting New York law or a similar statute has held that the paying of such an entry fee constitutes “staking or risking” the amount of that fee. For an activity to be illegal gambling in New York, the contest or event must be one that is a “contest of chance” and an event not subject to the “control or influence” of the player. The undisputed evidence confirms that DFS competitions are contests requiring great skill and knowledge in which chance is not a material element in the outcome. There is overwhelming, undisputed evidence that DraftKings’ contests are complex games of skill including evidence supported by three expert professors: o DraftKings experts at Gaming Laboratories International (“GLI”) ran simulations to test the performance of DraftKings lineups generated at random against the results of DraftKings highest repeat winning players. In each case, skilled DFS players dramatically

outperformed the computer simulations in head-to-head contests: 83% of the time in MLB, 96% of the time in NBA, 82% of the time in NHL, and 84% of the time in NFL. o Professor Zvi Gilula, an expert in statistics and a Professor at the University of Chicago— Booth School of Business, concluded that “winning a prize in any of the games that DraftKing offers strongly depends more on skill than on chance, and that chance is immaterial in the probability of winning.” o Professor Abraham J. Wyner, Professor of Statistics and Chair of the Undergraduate Statistics Program at the University of Pennsylvania’s Wharton School of Business, concluded that “DFS is deep and complex, and players with the most skill will usually and consistently defeat players with less skill. Although there is a chance component in certain DFS contests, DFS satisfies all the necessary and sufficient requirements for skillbased games in which the outcome does not depend in a material degree on chance.” o Professor Daniel Rubinfeld, an expert in econometrics (applying statistics to economics) and quantitative methods in the law and the Robert L. Bridges Professor of Law and Professor of Economics, Emeritus, at the University of California, Berkeley and a Professor at NYU—School of Law, concluded that “based on the evidence in the record at this point . . . while there is an element of chance in DFS games offered by DraftKings, as a general rule, winning a prize depends heavily on skill.” Factual proof of the skill based nature of DFS is evidenced by the affidavit of Peter Jennings, an avid DraftKings player, who spends 70-90 hours per week preparing, watching games, researching, and playing DFS contests. He is now a professional DFS player who regularly competes in elite daily fantasy sports tournaments. He has earned a net profit on daily fantasy sports since 2012. Most recently, he took the top prize of $1 million dollars at the DraftKings Fantasy Baseball Tournament in the Bahamas. He believes his success is the result of the immense amounts of research and preparation and the sophisticated analysis he has developed over years of playing. Independent experts Ed Miller (MIT) and Daniel Singer (McKinsey) have also confirmed the skillbased nature of DFS games, reaching two significant conclusions: (1) skilled players employ lineups that create covariance by choosing a combination of athletes intended to produce the extreme DFS outcomes necessary to win a large field tournament; and (2) skilled players use sophisticated models to optimize their lineups by projecting which athletes are most likely to under- or over-perform relative to their salary on a given day. The premise of fantasy sports---whether seasonal or daily---is to give the player the opportunity to play the role of a team’s general manager. There is no meaningful or rational distinction between DFS and season-long fantasy sports (which the Attorney General admits does not constitute a game of “chance”). The Attorney General admits that “seasonal” fantasy sports competitions are contests of skill, the outcome of which players control or influence—and hence not illegal gambling under New York law. This concession is fatal to the Attorney General’s legal argument and attack on DFS. In fact, DFS competitions require more skill, and entail less chance, than seasonal fantasy sports. The New York Attorney General’s sudden about-face concerning the legality of DFS seeks to deprive the more than 600,000 New Yorkers of their right to choose how to spend their money and be entertained when they follow sports. Telling citizens how they can spend their money, and what kind of entertainment they can enjoy, is unwarranted and not consistent with the principles of freedom and liberty upon which this country was founded.

For more information on DraftKings, please visit www.draftkings.com.

About DraftKings DraftKings, Inc. is a leading skill-based Daily Fantasy Sports (DFS) gaming destination for fans in North America and soon within the United Kingdom to compete in single-day online games for cash and prizes across the largest variety of professional and collegiate sports. DraftKings is the exclusive DFS partner of Major League Baseball, the National Hockey League, Major League Soccer, NASCAR and Ultimate Fighting Championship. Founded in 2012 by CEO Jason Robins, CRO Matt Kalish and COO Paul Liberman, DraftKings is headquartered in Boston, Mass. Contact: Sabrina Macias Head of Public Relations & Corporate Communications [email protected] (646) 565-6758

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