1. Is it legal according to all the regulations?
2. What about liability if a drone malfunctions and divebombs some people?
1. Is it legal according to all the regulations?
2. What about liability if a drone malfunctions and divebombs some people?
If you're flying a drone over crowds, you should take full responsibility for its ability to safely operate in a regular manner compliant with regulations.
Unless you could prove that your drone was sabotaged or jammed or something to that extent, you'd be liable for at least the damages and a misdemeanor charge.
I'm not a legal professional though, so take this with a grain of salt and consult one before flying over crowds (as well as FAA obviously).
Turns out that New York has not passed any relevant drone laws that I've found, but FAA guidelines specifically say you should not fly above groups of people: