It was a bad few weeks for Underdog Fantasy and similar fantasy sports companies who faced mounting criticism that their player versus house daily pick’em competitions were too close to prop sports betting, thus illegal.
The company received cease and desist letters or similar communiques for just that reason.
In response, Underdog has changed the game from peer versus house to peer versus peer and is rolling out the new approach on its player pick’em contests in Alabama, Mississippi, Tennessee and Wyoming, all states who expressed deep concern of the games operations. Underdog met with the regulators to talk about the changes.
Instead of playing to win three or six times the dollar amount of their entry fee, users will compete against each other, with a prize granted to those with the best score, according to the company spokesperson.
“We’ve built Underdog to innovate, and help sports fans increase their enjoyment with sports and that is exactly what we are doing with Pick‘em Champions,” Jeremy Levine, founder and co-CEO of Underdog, said in a statement.
“I’m very excited for what comes next as we continue to evolve Champions. Recently, a few regulators have said that in their states fantasy should be peer-to-peer. While we don’t agree with that interpretation of the law, we developed Champions to be peer-to-peer. “
In August, Underdog and PrizePicks — the two most downloaded daily fantasy sports apps this year, JMP Securities says— tweaked their offerings to meet demands from the Alabama Attorney General.
More recently, New York and Michigan banned DFS games deemed to mimic player prop betting.
That led to PrizePicks making its pick’em games free-to-play in Michigan last week. It intends to do the same in other states, according to a company spokesperson. Sleeper, another large pick’em operator, recently left New York following the ban, while PrizePicks and Underdog still offer paid pick’em there.
Prize Picks and Underdog are ahead of FanDuel and DraftKings in DFS app downloads during the NFL season, per JMP. DraftKings and FanDuel DFS apps do not offer pick’em or player versus house games.
An Underdog spokesperson noted that the arrival of peer-to-peer pick’em has no impact on the status of its player versus house games in any state.
