AGA Applauds State Action On ‘Faux’ Daily Fantasy Sports

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The American Gaming Association praised a recent wave of states taking action on ‘”faux” daily fantasy sports apps, during its State of the Industry address on Tuesday.

During the call, the casino trade group applauded the growing number of states determining pick’em DFS games fall more in line with their definition of sports betting. That includes states like Florida sending cease and desist letters to companies including PrizePicks and Underdog Fantasy, and New York issuing rules targeting those games.

“It’s not our role to make those determinations but we continue to encourage regulators to be vigilant to ensure DFS products don’t cross the line into sports betting,” said Chris Cylke, senior vice president of government relations at the AGA. “It’s been encouraging to see regulators in almost a dozen states look at this issue and determine that actions are warranted to protect the integrity of their marketplaces.”

‘Faux’ daily fantasy sports separate from offshore gambling

The AGA is the chief US lobbying group for commercial gaming, and represents online sports betting companies such as DraftKings and FanDuel. Cylke heads the trade group’s work with the Department of Justice and state regulators to crack down on illegal offshore gambling websites, and called enforcement against “faux fantasy” a separate issue from working to eliminate offshore websites:

“In the case of the former, these are companies that have licenses to do business. The core question is are they offering a fantasy product or are they offering a sports betting product?” 

The games in question allow users to combine different selections of athletes to go over or under a specific stat line. They reward winning users with payouts multiple times their entry fees, not unlike sportsbooks do with parlays. Most pit players against the house, unlike traditional peer-to-peer style DFS games.

Different products, different rules

Cylke pointed out different requirements for sports betting and DFS in most states.

New York. for example, charges online sports betting operators $25 million for a license, a 51% tax on revenue, and sets the minimum age to bet at 21 years old. New York DFS operators, meanwhile, are subject to a 15% tax on revenue and a minimum age to play of 18 years old.

“The AGA’s position on ‘faux fantasy’ has been clear. DFS and sports betting are different products and most states that regulate [them] differently, tax [them] differently, and have different minimum age requirements,” Cylke said. “With the regulatory and licensing requirements for sports betting operators generally significantly higher, it’s problematic that companies are intentionally blurring the line between those two categories.”

AGA calls rise in crackdowns a ‘snowballing effect’

Underdog founder and CEO Jeremy Levine has blamed the legal gambling industry for fueling “inorganic” attention towards his company’s pick’em product. He doubled down on that criticism in October after LSR reported a lobbyist with ties to DraftKings and FanDuel encouraged Wyoming regulators to scrutinize his company, among others.

Wyoming was notably the first state to take action against pick’em operators in 2023.

“We have not made a legal opinion on whether certain companies offering these products, whether it’s sports betting or DFS. That’s been something that regulators have looked at and made their own determinations on,” Cylke said. “In many instances that’s kind of built on top of each other because these regulators do look at what’s happening in other states and it’s been a somewhat organic kind of snowballing effect.”