Ohio Sports Betting Regulator Eyes Fantasy Apps ‘Masquerading As Games Of Skill’

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Ohio sports betting

Fantasy sports apps offering stakes on athlete performances in player vs. house competitions are “illegal casinos masquerading as games of skill,” according to Matt Schuler, Executive Director of the Ohio Casino Control Commission, the chief regulator of Ohio sports betting and fantasy sports.

Ohio sports betting regulators are aware of and weighing action against the “army” of player performance-based fantasy products in the state, Schuler said Wednesday during the OCCC’s monthly meeting. In an accompanying presentation, commissioners showed examples from formerly licensed fantasy sports app StatHero and now-defunct Monkey Knife Fight, where players would stake money on questions like whether Joe Burrow will throw for more or less than a certain number of touchdowns in a particular game.

The model is similar to player prop bets that licensed Ohio sportsbooks offer, where bettors can wager on whether athletes will exceed or fall short of a given stat line. Those wagers are prohibited from fantasy sports offerings under the Ohio Administrative Code.

Fantasy sports, Ohio sports betting regulated differently

While often regulated by the same state adjudicators, classification as either a fantasy sports or sports betting provider can mean a host of starkly different legal and financial implications.

Fantasy sports licenses can cost as much as $30,000 or as little as $3,000 in Ohio, depending on user-base size. By comparison, OH sports betting licenses range from $1 million to $6.67 million, depending on the type of operator and the number of “skins” or brands it runs.

Sports betting licensure also requires affiliation with an Ohio-based business, which can mean extra expenses in partnership fees.

How taxes break down

While Ohio does not have a corporate income tax, sportsbooks are subject to a 10% tax on gross gaming revenue.

The minimum age to bet is 21 as opposed to 18 to play fantasy sports.

Aleah Page, OCCC manager of licensing for casino gaming & fantasy contests, did not return LSR‘s request for comment.

Not the first time in Ohio

It is not the first time fantasy contests have drawn the ire of Ohio regulators. However, it is the first instance since legal sports betting began in January.

In November 2022, the commission revoked StatHero’s fantasy sports license for offering “against the house” fantasy contests:

“StatHero continued to advertise “against the house” fantasy contests in Ohio, via its national website, including the “Head 2 Head” and “Pick’Em” contests in violation of Ohio Adm. Code 3772-74-16, and offered Survivor contests to Ohio patrons, which was advertised by StatHero as an “against the house” contest,” a settlement agreement between the commission and StatHero parent Two Nine Sports Inc. reads.

Schuler said staff is scanning for more fantasy operators that violate the rule and may issue cease-and-desist letters. He did not identify a timeline for action, though an update may come at the commission’s next meeting, June 21st.

Fantasy sports coalition welcomes oversight

Underdog Fantasy was awarded an online Ohio sports betting license in December through a partnership with the Cincinnati Reds. According to the OCCC’s list of licensees, it must still satisfy certain conditions before launching its sportsbook.

Underdog offers player prop contests in non-legal sports betting states like California and Texas. However, the bets are not a part of its fantasy offerings in Ohio and 17 other states where sports betting is legal, nor in states where fantasy sports is expressly illegal, like Hawaii or Idaho.

“Our coalition and its member companies–Underdog, Prizepicks, and Sleeper–welcome the Director’s efforts to ensure that any company offering fantasy contests is properly licensed and following the clear rules that Ohio has in place,” the Coalition of Fantasy Sports said in an emailed statement.

In April, PrizePicks testified on behalf of the coalition in Vermont, offering to help regulators with their review of daily fantasy sports oversight, as directed under the sports betting bill expected to be signed into law.

Fireworks company approved for sports betting license

The commission also approved an in-person sports betting license for Phantom Fireworks, a multi-state pyrotechnics retailer headquartered in Youngstown.

Michael Podolsky, deputy general counsel for Phantom, said the company plans to open its Class B sports wagering facility at the Covelli Centre in Youngstown, a 5,200-seat multi-purpose arena and home of the USHL‘s Youngstown Phantoms.

It brings the total number of approved in-person sports betting locations in Ohio to 23. The OCCC may issue up to 17 more under HB 29, which Gov. Mike DeWine signed into law in December 2021.