Proposed regulation wouldn't affect DraftKings, FanDuel, but would impact others
Legal Sports Report

Bets Are Off In NY? Regulators Seek To Exclude Prop Betting From Fantasy Sports Law

NY fantasy sports prop betting
The New York State Gaming Commission is seeking to limit what a 2016 fantasy sports law allows via draft regulations, according to a copy of the document obtained by Legal Sports Report.

The limitations would seek to prohibit any fantasy contest that resembles “proposition betting.” Such a model is different from the salary-cap model employed by DraftKings and FanDuel where users select a roster of players.

It’s a move that is opposed by state Sen. John Bonacic — who sponsored the bill legalizing daily fantasy sports — in a letter to the gaming commission also obtained by LSR.

Fantasy sports does not equal prop betting?

The gaming commission made many proposed amendments to the New York DFS law. The most important would be limiting the scope of the law to exclude things that are less like traditional DFS and start blurring the line with sports betting.

You can read the draft regulations — in a memo from NYSGC general counsel Edmund Burns — here.

5602 (Permissible Contests): Criteria for permissible contests. These would include statutory standards as well as a requirement that contests shall not be based on proposition betting and shall not have the effect of mimicking proposition betting. Contests in which a contestant chooses whether an individual athlete or a single team will surpass an identified statistical achievement would be prohibited.

Contest types would be subject to approval by the Commission, including proposals to offer contests for a sports, league, association or organization not previously offered, allowing the Commission to gauge corruption risk to underlying athletic competitions.

What’s a prop bet?

The proposed amendments do not seek to define proposition betting. But generally it is understood to be a wager on the occurrence of an event within a game that does not directly or wholly affect its outcome.

Examples could include:

  • Will Tom Brady or Aaron Rodgers score more fantasy sports in Sunday’s NFL games?
  • How many home runs will Aaron Judge hit tonight: more or less than 1.5?
  • Will LeBron James score more or less than 30 points?

Who would these regulations affect?

They would not appear to affect anything offered by the DFS industry’s two behemoths, FanDuel and DraftKings.

It could possibly curtail offerings by some other operators, most notably New York-based Boom Fantasy and a parlay fantasy product like FastPick that is now live in New Jersey.

The two offerings are quite different. But both appear to be compliant with more than a dozen fantasy sports laws as written and the fantasy sports carveout in the federal Unlawful Internet Gambling Enforcement Act (UIGEA).

Boom Fantasy is not much different from DraftKings and FanDuel in the mechanics of playing, in which users enter contests with entry fees, trying to beat out other users. The difference is that it asks uses to make a series of predictions about player performances, rather than create a fantasy “roster.” (However, you do end up with the equivalent of a roster of players at the end of the selection process.)

FastPick, which is powered by a platform developed by SportAD, is much more akin to prop betting on players. A FastPick user must select which of two players will score more fantasy points, and must correctly select three to ten of these matchups. All selections must be correct for the user to win a cash prize.

Why is NY gaming doing this?

The gaming commission is given rule-making power to oversee the fantasy sports industry by the 2016 law.

In the memo, Burns writes that the amendments attempt to “ensure that IFS (Interactive Fantasy Sports) contests remain within the scope of activity the legislature authorized.”

Fantasy sports law’s author disagrees with proposed regs

Bonacic, who has led the push for both fantasy sports and online poker regulation, immediately penned a letter to the NYSGC.

In it, he says be intended the law to cover products like Boom Fantasy:

When I drafted S.8153, 1 intended to ensure enough flexibility to cater to many different styles of interactive fantasy sports gameplay. Competition generated between established incumbents like DraftKings and FanDuel, and innovative startups like Boom Fantasy, will lead the way to a robust industry for all.

I fully support and endorse Boom Fantasy’s application for a permit and license as a fantasy sports operator in New York. Their gameplay is exactly the kind of innovation that I envisioned when drafting and supporting this legislation, and I encourage you to approve their application. As a NY-based company that has grown substantially in the past year, I believe it is imperative that the company be allowed to operate in its home state.

Boom Fantasy recently raised $2 million, and exclusion from the New York market would obviously be a significant blow.

Whether Bonacic’s plea will resonate with the gaming commission is unknown. Short of that and a public comment period when changes can be suggested, NY Gaming could be putting the brakes on innovation in the fantasy sports space.

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Dustin Gouker
-

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer — including stops at The Washington Post and the D.C. Examiner.