Daily Fantasy Sports: DraftKings Lawyer Brings Up Pete Rose, Mahjong, Video Games While Forwarding Game Of Skill Argument

Ahead of a key hearing on daily fantasy sports in New York next week, DraftKings lawyer David Boies Friday criticized the actions of state Attorney General Eric Schneiderman, emphasized the service's games were based on skill, and talked about former MLB manager and player Pete Rose in a conference call with reporters. Boies said daily fantasy sports games have been played in New York for four years without their legality being questioned.

"The attorney general is entitled to change his mind," Boies said. "He is not entitled to unilaterally change the law."

A New York State Supreme Court hearing next Wednesday could determine whether the daily fantasy sports services DraftKings and FanDuel would be forced to shut down in the state, which would mark the loss of a major market. Schneiderman had previously ordered daily fantasy sports operators to stop accepting illegal "wagers," saying the services constitute illegal gambling.

"They're legal," Boies said. "They have been understood by everybody to be legal for the last eight years until 10 days ago." The lawyer made this point repeatedly. And he said that while a state could craft a way to define daily fantasy as gambling, New York had not defined it as illegal gambling. During the call, Boies referred to former MLB manager and player Rose, who was banned from the sport in 1989 for gambling on his own team. Boies said Rose's actions would have been legal in New York.

Representatives on both sides of the case are expected to ask New York Justice Manuel Mendez Wednesday to issue a preliminary injunction that either would allow the two daily fantasy sports operators to continue operating in New York or stop them from doing so. A trial likely would not take place for months.

However, the judge also could choose to not issue an injunction, leaving things in a state of flux, or to take the matter under advisement with no deadline for a decision, Sports Illustrated reported. Any injunction could be subject to appeal: Despite its name, the New York State Supreme Court is the trial-level court in the state's system, with its decisions subject to review not only by the Supreme Court's Appellate Division but also by the New York Court of Appeals.

Boies noted in the conference call DraftKings would "very seriously consider an immediate appeal" should the judge side with Schneiderman.

Boies argued the games are based on skill and do not have a material element of chance, a distinction that could be key. The lawyer compared daily fantasy sports with mahjong and video-game tournaments conducted with cash prizes, which he said were different from poker games because they involve random cards being dealt.

Asked about an opinion piece authored by Schneiderman that was published in the New York Daily News, Boies replied that the attorney general pointed out "less than 11 percent of players repeatedly win all of the prizes. That doesn't happen when players cannot influence the outcome."

In the Daily News piece, Schneiderman wrote: "That’s why more than 89 percent of one site's players are losers, despite seemingly endless TV ads promising easy money. This doesn't bear on the question of whether daily fantasy sports is legal -- but it is a reminder that laws against gambling are more than just the whims of the state."

The state court Monday rejected requests for temporary restraining orders made by DraftKings and FanDuel, but it scheduled the hearing for next Wednesday when Schneiderman's request for an injunction is expected to be considered.

"While irresponsibly denying their status as gambling companies, the DFS [daily fantasy sports] sites pose precisely the same risks to New York residents that New York's anti-gambling laws were intended to avoid," the attorney general's office said in a statement.

FanDuel has since shut down operations in New York, but DraftKings has not. Meanwhile, Yahoo was added to the motion made by the attorney general, but the online media company has continued its daily fantasy sports operations in the state, the New York Times reported.

Nevada was the first state to challenge the daily fantasy sports industry, but it sought only to have companies obtain licenses. Massachusetts said it would allow daily fantasy sports games, but would ban underage players, block promotions on college campuses and prohibit advertising.

DraftKings previously responded to the attorney general, saying he did not correctly interpret the law. "We look forward to being afforded a full and fair opportunity to demonstrate why daily fantasy sports are legal under New York state law," the company said in a statement Tuesday. "We believe the attorney general's view of this issue is based on an incomplete understanding of the facts about how our business operates and a fundamental misinterpretation and misapplication of the law."

New York has become a major battleground for daily fantasy sports since the industry came under increased scrutiny because of the scandal early last month centered on a DraftKings employee unintentionally leaking confidential data the same week he won $350,000 playing an NFL contest on FanDuel. New York is home to 12.8 percent of total daily fantasy sports users, so getting shut out there would represent a major loss for DraftKings and FanDuel, which both had experienced rapid growth before the scandal. The companies have been valued at more than $1 billion each.