Michigan has taken a significant step in regulating fantasy sports contests by implementing new administrative rules. These rules, which are required under the Fantasy Contests Consumer Protection Act, aim to provide a fair and secure environment for both operators and participants. The new rules went into effect on October 11.
The Michigan Gaming Control Board (MGCB) has been tasked with overseeing the licensing and operation of fantasy contests in the state, ensuring that they adhere to the newly established regulations.
The Fantasy Contests Consumer Protection Act, passed by the Michigan Legislature on December 20, 2019, authorizes the operation, conduct and offering of fantasy contests. This act serves as the foundation for the administrative rules that have recently been implemented. It ensures that fantasy contests in Michigan are based on real-world athletic events and the skills of individual athletes, rather than mimicking sports betting or proposition selection.
Henry Williams, executive director of the MGCB, said in a press release that the new rules are vital.
“Fantasy contests, like any other form of competitive gaming, thrive on rules and regulations,” Williams said. “The Administrative Rules, which were reviewed by the Michigan Legislature, provide a level playing field for all fantasy contest operators and participants, and will help ensure that fairness, transparency, and integrity are upheld.”
The MGCB issues two types of licenses for fantasy contest operators: operator licenses and management company licenses. An operator license is required to conduct or offer fantasy contests, while a management company license allows for the day-to-day operations of these contests on behalf of an operator. Both types of licenses are subject to review by the MGCB to ensure compliance with the Fantasy Contests Consumer Protection Act and associated rules.
Under the new rules, fantasy contest operators and licensed management companies can only offer contests that are based on real-world athletic events. These events, whether professional, collegiate or nationally recognized, must involve the skills of participating individual athletes, with the outcome of the contest directly dependent on their performances. This requirement ensures that fantasy contests remain true to the essence of sports competition.
Commercial casinos and federally recognized tribes operating Class III casinos are exempt from requiring a license for fantasy contests, but they must still meet all other requirements of the act and associated rules.
The implementation of the new rules has not been without its challenges. Critics argue that the ban on contests that mimic sports betting limits the options available to fantasy contest participants. Michigan residents have voiced their concerns to state lawmakers, urging them to reconsider these restrictions. Additionally, sportsbooks in the U.S. have taken varying stances on fantasy contests that resemble player prop betting markets, further complicating the landscape of fantasy gaming.
Despite the challenges, the Michigan sports betting market has seen steady growth and profitability for operators. In August, the state’s legal sports betting handle reached an impressive $228.4 million, generating $16.2 million in net revenue for operators. FanDuel emerged as the top sportsbook in Michigan for the month, followed by DraftKings and BetMGM. These figures demonstrate the strong demand for sports betting and related gaming activities in the state.
Michigan is not alone in its efforts to regulate fantasy sports contests. New York, Florida and Ohio are among the states exploring changes to their respective rules governing these contests. New York, for example, recently approved rules that ban contests that mimic proposition betting. These regulatory efforts reflect the ongoing discussions surrounding the proper oversight and consumer protection in the realm of fantasy gaming.
