Several popular daily fantasy sports apps including PrizePicks and Underdog are asking customers to help in the fight to keep their pick ‘em contests available in two of the largest US betting markets.
PrizePicks sent out emails in New York, while the Coalition for Fantasy Sports issued Facebook ads in Michigan, amid pending de facto bans on pick ‘em DFS. They urge customers to help stop a “fantasy sports ban”, though neither state’s proposal would ban traditional fantasy sports or other DFS games like draft contests and prize pools.
The Coalition for Fantasy Sports represents PrizePicks, Sleeper and Underdog Fantasy, each offering pick ‘em games that closely resemble player prop parlays at regulated sportsbooks.
PrizePicks, Underdog distinctions
Pending rules in Michigan and New York likely would define those games as sports betting. That would presumably force Underdog and PrizePicks to pull their most lucrative product from New York unless they somehow obtain one of the state’s capped-out betting licenses or revamp their product.
New York taxes sports betting operators at a 51% rate, more than three times its tax rate for fantasy sports. New betting operators are also subject to a $50 million fee and a much higher level of regulation.
Underdog pulled out of Michigan last year after the state created licensing requirements for DFS operators. PrizePicks is the only coalition member that does business in the state.
Michigan is one of the few states that applies the same 8.4% tax to fantasy and sports betting operators. Betting licenses cost $100,000 and an extra $50,000 a year to renew.
States differ on pick ‘em views, enforcement
While many states without legalized sports betting have not issued opinions on these specific games, others have clamped down.
PrizePicks stopped offering its products in Maryland and West Virginia after regulators broached the topic with the company last year. Meanwhile, Underdog recently launched a significantly altered version of its pick ‘em in Colorado to appease regulatory concerns.
Both companies say they are working with Wyoming regulators after receiving cease-and-desist orders this summer that called their games unlicensed sports betting. The companies defend their games as legal under the federal UIGEA skill-based carveout for fantasy sports.
Timeline for Michigan, New York rules
Michigan’s proposed rule would prohibit “proposition selection or fantasy contests that have the effect of mimicking proposition selection.”
It is currently pending with the Michigan Gaming Control Board but would need final approval from the state legislature before it could take effect.
New York’s definition is much closer to reality. Pending rules that would classify DFS contests believed to mimic player props as sports betting may be finalized as early as October 4.