Last month, the Wall Street Journal ran a story on the daily fantasy site (DFS) PrizePicks’ strategy to target users, including in non-legal U.S. sports betting states. The article came on the heels of comments from FanDuel about some daily fantasy sports operators.
“There are companies today posing as fantasy-sports operators, and they are running illegal sportsbooks,” FanDuel’s Head of State Government Relations Cesar Fernandez told the National Council of Legislators from Gaming States (NCLGS) summer conference in Denver in July.
Seems that some DFS operators offer parlay-like prop bets, allowing bettors to pick over-under on stats for specific athletes. Representatives at the conference told LSR the games fall under the DFS laws of game-of-skill rather than the gambling definition of chance.
While many regulators have allowed DFS operators to keep offering the products, some have clamped down. PrizePicks stopped offering its products in Maryland and West Virginia after regulators broached the topic with the company.
In Vermont, the company offered to help regulators research the potential overlap between DFS and gambling, a study sanctioned under the state’s new sports betting law.
FanDuel and DraftKings built the U.S. DFS market and now lead the way in sports betting. After spending millions of dollars lobbying for DFS laws state-by-state before the fall of PASPA, they paid millions more in market-access fees and licenses, as well as sports betting revenue taxes as high as 51 percent in New York.
Fernandez wants to focus on games from pure daily fantasy operators that could potentially qualify as sports betting.
“All we can do is highlight it. It’s really up to regulators to determine if this is something they want to do something about,” Fernandez told LSR after his comments at NCLGS.
Underdog Vice President of Government Affairs and Partnerships Stacie Stern sees parallels to the early days of daily fantasy sports.
Employed at FanDuel at the time, she dealt with the “razzing” of season-long fantasy operators saying it was sports betting in disguise.
Stern believes the “pick ‘em games” now under fire are games of skill. Underdog, unlike PrizePicks, has hopes to enter the U.S. sports betting markets.
“I was one of the few people who looked at DFS and saw it for what it was, just because it was daily did not mean it required less skill than a full season fantasy sports contest,” Stern told LSR. “We’re in that same type of situation. Building a roster, whether it’s predicting performance based on predictions set by operator or a salary set by operator and determining whether that player will perform at that salary is set. When I would set the lineup, I would need 3x, 4x, 5x performance based on salary of my roster.
“This is where I go higher or lower. That’s how I would set a salary cap. It’s a fundamental difference of opinion, and as long as we’re all respectful, I don’t have an issue on disagreeing with what the law says. I’m talking to legislators and regulators and they’re, for the most part, open to innovation and understanding that it’s a game of skill and that to me is what matters, I’m not worried about what the competition says.”
The Coalition for Fantasy Sports, which includes PrizePicks, Underdog Fantasy and Sleeper, also commented on the WSJ piece:
“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 said in a statement. “It’s a thinly veiled attempt to create a false narrative and position themselves as the only games in town.
“Unable or unwilling to compete on product, they’re doing what incumbents often do when faced with new competition. The narrative they’re spreading directly contradicts the laws they helped to write and pass, laws that make crystal clear that fantasy sports are not sports betting. Their anti-competitive approach is disingenuous and is bad for consumers.”
Earlier in the year, New Jersey issued a cease and desist letter to Prediction Strike for offering unlicensed sports bets. Prediction Strike also ticked off the Ohio Casino Control Commission (OCCC) for offering contests similar to sports betting.
StatHero received a three-year DFS suspension from the OCCC in November 2022 for similar reasons. Meanwhile, Fliff and its “free-to-play sweepstakes” are part of a class action lawsuit in California questioning its legality based on the resemblance to sports betting.
