That's a poor analogy. A better analogy would be the federal government legalizing marijuana (which they essentially have) but an individual state saying "not here, fellas."
The laws on the books in NY are clear. Gambling on sports is illegal. All the AG did was decide that hey, DFS fall under that blanket. And he's right. Also, he is not the first. Nevada made the same declaration a couple weeks ago. There are now 6 or 7 states which have outlawed DFS's. I expect eventually every single state will recognize DFS's are gambling. Some will decide to allow it, some will forbid it, but all will regulate it.