Underdog Rolls Out Revised Pick ‘Em In Colorado To Appease Regulatory Concerns

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Underdog Fantasy recently launched its pick ‘em product in Colorado, but there is a major difference from similar games in question in other states. 

This month, Underdog announced its pick ‘em games were launching in Colorado after the Colorado Division of Gaming gave the product a green light under the operator’s daily fantasy sports license. In most states where pick ‘em is live, users can pick two or more players with outcomes based on statistics in real-world contests.

Colorado regulators allowed the pick ‘em product to launch, but in a scaled-back version with two primary differences:

Underdog celebrates Colorado start

The limits by Colorado regulators create a product with distinct differences from the prop-style offerings receiving heavy scrutiny from state regulators throughout the country.

Underdog founder and co-CEO Jeremy Levine nevertheless pitched the Colorado launch as validation.

“[Colorado] is a state with a robust sports betting market and it’s always been a standout state for fantasy sports,” Levine said on social media about the launch. “It’s a common misconception that Pick’em fantasy has no place in states with sports betting. Our growth in states with both clearly shows otherwise. We’re excited to work with regulators to keep on expanding that list.”

How Colorado regulators allow Underdog

A Colorado Division of Gaming spokesperson told LSR regulators looked at daily fantasy sports products carefully.

“The operators have complied with what we have asked of them,” a spokesperson told LSR. “For example, operators that offer ‘pick’em’ style contests have been required to have a minimum of four athletes, and outcomes must be based on fantasy point accumulation.”

The spokesperson also said a rule change in the works could alter daily fantasy sports regulations.

Scrutiny rising for daily fantasy sports

Regulatory questions around daily fantasy sports pick ‘em offerings continue to mount this summer. Some regulators believe the products too closely resemble sports betting proposition bets.

Last month, Wyoming sent a cease and desist letter to Underdog and PrizePicks for offering what it said amounted to sports wagering.. Last year, Maryland and West Virginia sent cease and desists, which led to the companies withdrawing pick ‘em from those states.

Also last month, Maine sent a notice of complaint to Underdog questioning the similarities of pick ‘em to sports betting. Maine regulators extended the response deadline to September 11.

National media attention on the issue also came following a PrizePicks feature in the Wall Street Journal.

Underdog response to attention

Daily fantasy sports operators argue pick ’em games fall into the fantasy sports carve out in UIGEA because they qualify as games of skill rather than chance.

Levine responded to the rise in questions about the products with an open letter this month. He blamed FanDuel and DraftKings for the new attention on the industry. More than a month earlier, FanDuel employee called out DFS operators for “running illegal sportsbooks” at the NCLGS industry conference.

In Levine’s letter, he mentioned multiple states that have “concluded our games fit perfectly within the legal definition of fantasy sports.” Beyond Colorado, he also cited Arizona, Indiana and North Carolina.

States less than clear on Underdog pick ’em

While Levine is confident of the regulator stances on pick ’em products, those regulators were less than clear in responses to LSR.

Along with Colorado’s restrictions on the product, regulators from the states Levine mentioned offered the following responses to LSR about pick ’em games:

Domino effect coming?

The Colorado rules for pick ’em are a shining example of how states are handling the situation differently, according to Eric Fishman, a sports attorney at ArentFox Schiff. He said the nature of state-by-state regulation can result in “quirky interpretations” such as that by Colorado.

Fishman said the daily fantasy sports situation is among the hottest topics in the legal sports betting industry at the moment. As some states begin to tighten the regulations around DFS, he wonders if more crackdowns are to come.

“That’s the big issue in the industry right now, what’s happening in DFS over the last few months,” Fishman said. “It’ll be interesting to see if there is a domino effect with states.”

DFS operators work with regulators

Sources at Underdog and PrizePicks said they work with regulators across the country to ensure they are within the bounds of rules.

“We respect the views of regulators, including regulators in multiple states who have expressly approved our games as fantasy contests under their fantasy sports statutes,” a Coalition for Fantasy Sports statement said last month. “We likewise respect the views of regulators in the small number of jurisdictions who have taken a different view based on issues specific to those states.

“We will continue to work with policymakers nationwide to uphold high standards of consumer protection, ensure our games are only marketed to those legally allowed to play them, and maintain our shared commitment to building responsible play programs.”