Maine became the latest state to ban pick’em games offered by fantasy sports companies, leading to Underdog at least temporarily pulling back the prop-style markets.
Last week, the Maine Gambling Control Unit issued a fine of $391,850 dollars to Underdog for offering illegal daily fantasy games, MGCU Executive Director Milton Champion told LSR on Tuesday. Underdog has 30 days to appeal but was instructed to immediately cease offering pick‘em contests in the state, according to Champion.
An Underdog spokesperson told LSR the company stopped offering pick’em products in Maine following Champion’s decision. Underdog’s move is a notable departure from other states where regulators instructed the company to stop offering pick’em.
The MGCU began investigating the situation in May as it began working on sports betting rules in preparation for launch. Champion told LSR Maine sports betting will launch in November 2023.
Illegal Maine DFS offerings
According to the final written decision obtained by LSR, the MGCU first became aware of the pick‘em offerings May 26. The agency filed a complaint July 11 investigating the legality of the products, which allows customers to compete against the house.
Underdog replied September 11 that the pick‘em products are “flexible fantasy contests” that allow “customers to select their own scoring parameters rather than being locked into an operator’s grid of fantasy points.”
Champion’s choices explained
In the written decision, the Champion wrote fantasy providers:
“provide that a winning outcome may not be based on the score, point spread or performance of a single actual sports team … or solely on a single performance of an individual athlete.”
He also ruled that:
“contests must involve more than one contestant and wagers cannot be made against the operator.”
Underdog pick’em wagers placed in Maine
Maine regulators followed with a request for the number of wagers placed in pick‘em products. By October 15, it was determined Underdog accepted at least 482,771 wagers from 7,837 individuals in Maine.
At least 4,781 of the participants had at least one winning wager and the action generated net revenue of $1.4 million for Underdog since January 2021. Maine statutes allow a fine of up to $1,000 per violation. Champion chose a compromise of $50 for each of the 7,837 pick ‘em participants.
“This is the first of its kind and is setting a precedent,” Champion told LSR. “It sets the tone going forward, but any other violations will be looked at separately.”
Underdog response to Maine ban
Underdog said it complied with all requests during the MGCU investigation.
“This is just an initial step in the administrative process, and we now have the opportunity to be heard by the state in the coming weeks and look forward to receiving a final decision that ultimately agrees with our interpretation of Maine law,” an Underdog spokesperson said Tuesday.
Pick’em remains hot industry topic
Since Maine’s investigation into Underdog emerged in July, the DFS industry has been under growing regulatory scrutiny. Prior to Maine’s ruling last week, the first set of North Carolina sports betting rules included a pick’em ban.
Numerous other states reached similar decisions earlier in 2023:
- A pick’em ban in Michigan took effect, while New York also implemented a similar rule.
- Florida regulators issued a cease and desist to Underdog, Betr and PrizePicks in September.
- Wyoming sent a similar order in July.
- Underdog launched an adjusted Colorado pick’em product in August based solely on fantasy points following regulator feedback.
Maine sports betting coming
While no firm launch date has been selected, Champion said Maine sports betting will go live in November. The debut will cap a process that began in May 2022, when Gov. Janet Mills signed sports betting into law.
“We’re excited. We’re raring to go,” Champion said. “The day after we go live, I’m going to Disneyland. There comes a time when you just need to roll it out, let the wrinkles come and then iron it out. We didn’t reinvent the wheel or come up with anything new.”
Caesars partnered with three of the four tribes eligible for an online sportsbook in the state. Champion anticipates the fourth, the Passamaquoddy Tribe, will apply before the launch.
