The lawsuit filed by Airbnb and three New York City hosts to challenge the city's new restrictions on listings was slapped down by a judge Tuesday.

New York Supreme Court Judge Arlene Bluth issued her decision finding Local Law 18, which restricts the platform from collecting payments from units that aren't registered with the city, isn't "an onerous obligation," the Associated Press reports.

The law has already taken effect, but penalties meted out by the Office of Special Enforcement can now take effect in the fall as planned, pending an appeal.

“Requiring that a listing have a registration number and that Airbnb only accept fees from listings with a valid registration number makes perfect sense,” Bluth wrote. “It is a method designed to streamline the process of ensuring that only eligible spaces appear on Airbnb or other listing sites.”

Airbnb and the hosts sued the city in June, seeking $85M in damages and claiming that the rule would effectively ban Airbnb in the five boroughs. Airbnb Global Policy Director Theo Yedinsky told the AP in a statement the ruling will hurt New York, calling it “a blow to its tourism economy and the thousands of New Yorkers and small businesses in the outer boroughs who rely on home sharing and tourism dollars to help make ends meet.”

Rosenberg & Estis litigator Adam Lindenbaum said in a statement that Bluth's decision is likely to be upheld if appealed, but he cautioned that the city's enforcement could lead to issues for some landlords with illegal listings in their buildings.

“The Office of Special Enforcement seems to be taking the position that it is authorized to fine landlords even when they have done everything they can to ban illegal short-term rentals and comply with the law, and when tenants have willfully circumvented legal requirements and landlord efforts to keep short-term rentals out of their property," Lindenbaum said. "This places another unfair financial burden on owners who have not caused the offence and, indeed, who have done everything to try to prevent it.”

Local Law 18 is seen as already having a positive effect on New York's hotel industry, which is seeing improved momentum as competition is taken offline, both because of legal restrictions and the hotels that have signed contracts to serve as shelters to house the 90,000-plus migrants that have come to the city this year.