AGA Argues Prop Style Fantasy Games Undermine Marketplace Integrity

Across the industry, multiple jurisdictions have either passed or introduced regulations to ban prop-style and pick’em-style fantasy games. Legislators argue the game modes are too similar to prop betting at online sportsbooks. Several markets have sent cease and desist letters, issued fines, and added legislation to their lawbooks to outlaw the popular fantasy sports games. Operators, conversely, argue these new rules have created an uncooperative and unfair process between themselves and regulators.

What does the future hold for these popular games?

Fantasy Prop-Style Games On The Hot Seat

So far in 2024, Florida, New York, Michigan, and Maine are among the markets that have taken steps to stop pick’em fantasy games. Popular operators like PrizePicks and Underdog have received cease and desist letters and fines from some local governments.

Florida regulators, for example, argued that under Florida law, the pick’em style DFS games are prohibited. In the official complaint by the Florida Gaming Control Commission, lawmakers believe these operators are operating illegally.

Louis Trobetta, Florida Gaming Control Commission Executive Director, wrote the following regarding the issue,

“Under Florida law, betting or wagering on the result of contests of skill, such as sports betting, including fantasy sports betting, is strictly prohibited and constitutes a felony offense unless such activity is otherwise exempted by statute. Accordingly, in Florida, sports betting may be lawfully conducted only pursuant to a gaming compact. Further, receiving such illegal bets and wagers and aiding or abetting such criminal activities constitute separate felony offenses.”

In addition to Florida, New York issued a complete ban on prop-stye fantasy games. The New York Gaming Commission voted to ban these styles of games on DFS apps and require operators to have a sports betting license to offer prop-style games.

Maine fined Underdog Fantasy nearly $392,000 for offering what it deemed illegal fantasy games. As a result, Underdog removed its product from the state.

American Gambling Association Sides With States On the Issue

It is not only the states viewing these pick’em style games as teetering the line between fantasy sports and sports wagering. The American Gambling Association has also been vocal about its stance against these popular fantasy games. In a statement to TheLines.com, AGA Senior Vice President of Government Relations Chris Cylke spoke about the importance of distinguishing between sports betting and fantasy gaming.

“States have purposefully created distinct licensing and regulatory obligations for sports betting and daily fantasy sports. Legal sports betting operators spend significant resources to secure and maintain a gaming license. When some fantasy operators attempt to blur the lines and offer sports betting products, they undermine marketplace integrity, consumer protections and tax revenue. So, we are encouraged to see regulators across the country taking action to clarify and enforce the rules, ensuring that fantasy operators are only offering products they are authorized to offer.”

– Chris Cylke, AGA Senior Vice President, Government Relations

Operators Respond To Fantasy Sports Bans

Representatives from both Underdog Fantasy and PrizePicks have begun responding to lawmakers about the issue. Thus far, their responses have not caused local markets to undo their bans. They have argued that in some of these states, their products have been operating for years without issue. Their representatives have also argued that the licensees that were once in alignment with regs but now aren’t should be allowed a hearing and review process rather than a hard stop on operations.

“The legislature could have easily adopted the exact same language that the proposed rules have in them, and it chose not to do that,” said Nicholas Green, Underdog General Counsel. “It chose not to do that, knowing full well what the fantasy sports landscape in North Carolina was on the day of passage, in which our company and other companies like ours had been operating for years and offering fantasy contests.”

Addressing North Carolina’s Decision

“The question becomes for a current licensee offering games that were previously in line and licensed by the division, but might not fit into these new rules, what procedural due process will be afforded to those folks?” asked Josh Kirschner, a lawyer representing PrizePicks. “What will they be allowed to offer contests until their current license expires? Will there be some sort of hearing and review period? Will there be some sort of cooperative process?”

Addressing Colorado’s Decision

More Markets Likely To Follow

North Carolina, a market set to launch in 2024, added language in its sports betting rules that would ban prop-style games from fantasy sports apps. While the regs are not yet finalized, NC will likely follow other markets in banning the practice.

Arizona and Mississippi have also begun scrutinizing these fantasy pick’em games. Mississippi Gaming Commission Executive Director Jay McDaniel released a letter to operators clarifying fantasy gaming rules.

McDaniel states that fantasy contests vs. the house are not allowed in Mississippi. Additionally, fantasy contests should consist of accumulated statistics of multiple players instead of one aspect of an athlete’s performance.

Fantasy Sports Operators Provide Peer-To-Peer Offering In Response

With the bans on prop-style games, popular fantasy apps have begun promoting different game options. Underdog is now offering users a new peer-to-peer pick’em game. Users will compete against one another as opposed to against the house. This new game mode is live in Alabama, Mississippi, and Wyoming.

“We’ve built Underdog to innovate and help sports fans increase their enjoyment with sports and that is exactly what we are doing with Pick‘em Champions,” wrote Underdog Fantasy in the official release.

PrizePicks has rolled out a free-to-play pick’em contest in Michigan. This new game allows PrizePicks to offer their app in the state. Michigan previously banned the product without this new offering. These popular fantasy apps continue to fight for their products across several markets by changing and adjusting their offerings based on the latest regulations.