Michigan is the latest state to take aim at the potential overlap between daily fantasy sports pick’em games and sports betting.
The Michigan Gaming Control Board recently proposed DFS regulations to prohibit “proposition selection or fantasy contests that have the effect of mimicking proposition selection.” The proposed rules address the single-player DFS pick’em contests offered by companies like PrizePicks and Underdog Fantasy, as opposed to traditional DFS multiplayer lineup contests offered by DraftKings and FanDuel.
Underdog has not operated in Michigan since 2022, when the state created DFS licensing requirements. Only Boom Fantasy, PrizePicks and RealTime Fantasy Sports offer the pick’em contests equated to prop betting by Michigan’s proposed rules.
Both companies defend their games as legal under the federal UIGEA skill-based carveout for fantasy sports, while regulators in states like Ohio and Maryland have classified those games as de facto sports betting. Neither company operates in those states.
New York’s similar daily fantasy sports take
The news from Michigan comes shortly after New York regulators gave a similarly worded interpretation in a response to comments on their proposed rules. Meanwhile, Massachusetts is taking a look at the issue after Wyoming regulators sent PrizePicks and Underdog cease and desist letters, accusing each of offering unlicensed sports betting.
Each of those states legalized sports betting after the fall of PASPA. Their tax rates for sports betting operators range from 10% to 51%. Their license fees range from $100,000 to $25 million.
Michigan is one of the few states that applies a similar tax rate to both industries.
Legislative approval needed in Michigan
Michigan’s regulations are still pending and would need approval from the state legislature before they take effect.
The legislature previously approved a rule change that created licensing requirements for fantasy operators who had otherwise operated with scant oversight.
That led to companies including Underdog and Yahoo! pulling out.