Arkansas is the latest of a growing number of states to crack down on daily fantasy sports pick’em games popularized by PrizePicks and Underdog Fantasy.
Arkansas sports betting regulators sent PrizePicks and Underdog cease and desist letters on Thursday. In a press release, it described both companies’ pick’em games as sports betting, not DFS.
“Daily Fantasy Sports operators offer a version of the traditional fantasy football concept, with a consumer creating a team and points being assigned based on performance. The consumer creating the best performing team is rewarded. In the last year, these operators have offered a product associated with sports betting: ‘player prop bets,’” the Arkansas Department of Finance and Administration said.
Busy week for PrizePicks, Underdog
The Arkansas letters come the same day Florida announced a second batch of cease and desist letters sent to those companies, as well as Betr. An LSR report revealed that Underdog and potentially all three of those companies will leave the Sunshine State by March.
Earlier this week, PrizePicks agreed to a $15 million settlement with New York for operating there unlicensed for three years. PrizePicks has since pulled paid pick’em from the state. Underdog continues to operate there despite rules in October that banned those games.
Regulator: ‘Arkansas is not wide open’
Both companies are dealing with multiple orders to leave other states as well.
“Back in the day, places that tolerated illegal gambling were referred to as ‘wide open,’” DFA Regulatory Administrator Trent Minner said in a statement. “The Internet is today’s equivalent of a ‘wide open town’ where unlicensed gambling thrives outside of the taxation and age-verification requirements required by the law. As the state’s regulator of licensed sports betting, DFA is putting these companies on notice that Arkansas is not ‘wide open.’”
Underdog declined to comment. A PrizePicks spokesperson contends the company has been “fully compliant with all laws,” in a statement:
“PrizePicks has made compliance and collaboration with regulators a top priority since day one,” the spokesperson wrote, later continuing, “We will challenge any and all of these actions as appropriate, and fully intend to defend the rights of our hundreds of thousands of passionate customers in these states.”
Cost of Arkansas sports betting vs. daily fantasy sports
Arkansas sportsbooks pay a 13% tax on their first $150 million in revenue and a 20% rate on additional proceeds. Under Arkansas law, each is partnered with a land-based casino, with whom they split revenue.
DFS companies are subject to a lower 8% tax rate under a 2017 law that legalized the industry. The four-page pact outlines few requirements for operators.
The legal age to bet on sports in Arkansas is 21, versus 18 to use daily fantasy sports apps.
