In recent years, New York State has embraced mobile sports betting, leading to a dramatic surge in revenue and a parallel rise in legal challenges. As this rapidly evolving industry takes shape, key developments in legislation, regulation, and litigation are helping to define the rules of engagement for operators, consumers, and policymakers alike.

Path to Legalization

New York's journey toward legal sports betting began with a 2013 constitutional amendment, approved by voters, authorizing the legislature to allow “casino gambling” at specific facilities. This framework set the stage for future expansion.

In 2018, the U.S. Supreme Court’s landmark decision in Murphy v. NCAA, 584 U.S. 453 (2018), invalidated the federal Professional and Amateur Sports Protection Act (PASPA), which had prohibited states from authorizing sports betting. The decision opened the door for states like New York to regulate and license sports betting within their borders.

In April 2021, New York enacted legislation (N.Y. Racing, Pari-Mutuel Wagering and Breeding Law § 1367-a) authorizing mobile sports betting. The statute allows mobile wagers to be routed through servers physically located at licensed casinos, thereby complying with the constitutional requirement that gambling occur at an “authorized facility.” Under this structure, a wager is legally considered placed at the location of the server.

Revenue and Regulation—A Double-Edged Sword

Since legalization, mobile sports betting has exploded in popularity. According to the New York State Gaming Commission, nearly $58 billion in bets have been placed since launch. October 2024 alone saw $2.3 billion in mobile wagers. In fiscal year 2023–2024, mobile sports betting generated $1.7 billion in revenue.

New York’s tax regime plays a central role: at 51%, it ties for the highest tax rate on mobile betting revenue in the country (alongside Rhode Island and New Hampshire). Tax revenues have been earmarked for education, leading proponents to celebrate mobile betting as a fiscal win for public programs.

However, the ease of mobile betting has triggered serious concerns about addiction and financial harm. Studies have linked the proliferation of mobile betting with increases in personal bankruptcies and declines in household savings. New York’s gambling helpline reported a 26% spike in calls in the first year of legalization.

In response to concerns over aggressive advertising, particularly in the early days of legalization, Governor Kathy Hochul signed legislation requiring sports betting ads to include addiction warnings and the state’s helpline number. The law also gives users the ability to opt out of targeted advertisements.

Recent Litigation: Marketing and Misrepresentation

Mobile sports betting's rapid expansion has already led to legal challenges. One recent case, Hess v. DraftKings Inc., No. 24-CV-8472 (E.D.N.Y. July 28, 2025), involved allegations that DraftKings engaged in deceptive marketing by promising new users a $1,000 bonus upon signup.

DraftKings moved to dismiss the complaint, citing clear disclosures in its promotional terms. The court agreed, holding that the offer was not misleading to a “reasonable consumer.” The decision emphasized that the promotion stated the bonus was up to $1,000, and that eligibility criteria were disclosed “in a conspicuous manner.” The case reflects courts’ increasing scrutiny of gambling promotions under consumer protection laws.

Fantasy Sports Betting: Legal Distinctions and Evolving Standards

In White v. Cuomo, 2022 NY Slip Op 01954 (N.Y. Mar. 22, 2022), the New York Court of Appeals held (4–3) that fantasy sports contests do not constitute prohibited gambling under the state constitution. The court upheld a 2016 legislative finding that fantasy sports are games of skill, not chance, because participants select players based on knowledge and strategy, not random outcomes.

The court also applied the “dominant element” test to evaluate whether skill or chance primarily determines outcomes. Citing studies on fantasy sports performance, the court concluded that skill predominates, rendering fantasy sports permissible under New York law.

Still, concerns about regulatory evasion persist. In October 2023, the New York State Gaming Commission adopted Rule 5602.1(a)(4), which prohibits fantasy sports contests that rely on proposition-style bets (e.g., predicting individual player stats).

In Ballentine v. Underdog Sports, LLC, No. 1:25-cv-01106 (E.D.N.Y. Feb. 26, 2025), plaintiffs brought a class action alleging that Underdog’s “pick ’em” games, where users wager on whether real athletes will exceed certain stats, were essentially unlicensed sports bets disguised as fantasy sports. The case is ongoing and could shape how platforms structure and market such games.

What's Next for iGaming in New York?

Mobile betting has paved the way for broader online gambling—or iGaming—which would include online versions of traditional casino games like blackjack, roulette, and slots. Senator Joseph Addabbo, chair of the Senate Committee on Racing, Gaming and Wagering, has led efforts to legalize iGaming, touting its potential for additional tax revenue.

However, the push for iGaming faces opposition. The Hotel and Gaming Trades Council, representing casino workers, opposes the expansion over job displacement concerns. Addiction experts and advocacy groups also warn that expanding access to online gambling could worsen public health issues.

In early 2025, Assemblymember Robert Carroll introduced legislation aimed at curbing the risks of mobile gambling. His proposals include:

• A $5,000 daily wager cap
• Deposit limits per 24-hour period
• Mandatory warnings at $2,500 in lifetime deposits
• Stricter marketing rules targeting ad content, timing, and inducements

If enacted, these measures would represent a significant shift in how the state regulates mobile gambling behavior and advertising.

Final Thoughts

As mobile sports betting continues to evolve in New York, so too does the legal landscape surrounding it. New cases, shifting regulations, and new product offerings will continue to test the boundaries of constitutional, consumer protection, and gaming law.

Gallet Dreyer & Berkey will continue to monitor and provide insight on these developments. For more information or legal assistance related to gaming law, contact Maximilian Ferlesch at mtf@gdblaw.com.