New York Bans Fantasy Games That Have ‘Effect Of Mimicking’ Sports Betting

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New York sports betting

New York sports betting regulators have agreed to ban fantasy sports games that have the effect of mirroring player prop bets offered by sportsbooks.

New York State Gaming Commissioners on Thursday unanimously agreed to adopt NY sports betting Rule 5602.1(a)(4), which makes “explicit that [fantasy] contests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting.”

The commission did so despite pleas from the Coalition for Fantasy Sports, which represents PrizePicks, Underdog Fantasy and Sleeper, the three leading fantasy sports operators to offer “pick ’em” games. Those games, which pit users against the house, may be outlawed under the rule, while traditional DFS and casual fantasy leagues are likely not impacted.

Two weeks until rules publish

The rules are expected to be officially published in the state register by Oct. 18, according to an NYSGC spokesperson.

“We will continue to work with the gaming commission to ensure we operate under the finalized fantasy sports rules,” an Underdog spokesperson said in a statement.

“We are meeting regularly with the NYGC to discuss the future of fantasy sports in New York. We are grateful for the advocacy efforts of our many members in the state and will work with policymakers to ensure that they can continue to play the fantasy sports they know and love,” a PrizePicks spokeswoman said in a statement.

Scrutiny over sports betting style DFS comes to head

Scrutiny over pick ’em DFS has come to a head in recent months, with half a dozen states addressing the potential overlap those games have with sports betting:

Each has, in some way or another, likened the combinations of athlete over-unders in pick ’em games to parlayed player props on betting apps.

The coalition’s members have largely argued that pick ’em contests should not be classified as gambling because of a skill-based carveout for fantasy sports in the Unlawful Internet Gambling Enforcement Act of 2006. In a recent open letter to customers, Underdog’s founder blamed the increased scrutiny over pick’ em on DraftKings and FanDuel.

“It’s unfortunate DraftKings and FanDuel, the same companies that championed fantasy sports as skill-based for years, have changed their tune at the first sign of competition,” the Coalition of Fantasy Sports, said in a statement released in August. “It’s a thinly veiled attempt to create a false narrative and position themselves as the only games in town.”

New York notes ‘vote no to outlawing DFS’ campaign

The NYSGC noted that it received 1,462 letters solicited by a fantasy sports operator that wishes to operate in New York. It also acknowledged the PrizePicks campaign that mischaracterized the rules as a blanket ban on all fantasy sports:

The identical comments from individuals solicited in the PrizePicks campaign each stated opposition “to regulations that would limit my ability to play my favorite fantasy sports.” The comments stated an understanding that the proposed regulations “will effectively ban fantasy sports” and urged the Commission to “vote no to outlawing daily fantasy sports.”

– NYSGC, page 12 of meeting Packet

The Coalition for Fantasy Sports is running a similar campaign in Michigan, where similar rules are pending.

New York sports betting apps pay high taxes

If PrizePicks or Underdog, which also offer traditional DFS games, want to keep offering pick ’em in New York they would likely have to apply for an online gaming license.

Those cost $25 million a pop and put recipients in line for New York’s widely criticized 51% tax on online sports betting. They would also have to comply with New York’s minimum betting age of 21 versus 18 for daily fantasy sports.

Betr founder Joey Levy recently noted that pick ’em is much less “financially intensive” than online sports betting.

Pick ’em operators could lose another big market

PrizePicks, Underdog and Betr were recently ordered to cease operations in Florida.

Unlike New York, Florida does not actively have legal betting apps, though a pending court decision could soon restore exclusive rights over the industry to the Seminole Tribe. A subsequent update to the Florida regulator’s website would seem to implicate all forms of paid fantasy, unlike New York’s rule.

Spokespeople with PrizePicks and Underdog have indicated that they remain operational in Florida despite the order and hope to find a resolution with regulators soon.