The landscape for prop-style DFS operators has become increasingly complex in recent weeks, with regulatory action emerging in three US states.
The landscape for prop-style daily fantasy sports (DFS) operators has become increasingly complex in recent weeks, with regulatory action emerging in three US states.
State regulators are increasing their oversight of pick’em-style daily fantasy sports contests, creating operational challenges for prop-style DFS providers in the US.
Michigan is the most recent state to make headlines as it looks set to prohibit pick’em-style games by the end of October.
What are pick’em-style games?
Pick’em-style games place a greater emphasis on predicting player performance data compared to traditional DFS platforms.
Similar to prop bets commonly found in sportsbooks, participants must decide if a player’s performance will surpass or fall short of specific statistical thresholds.
These games are legally classified as fantasy sports due to their design and prize pool structure.
These DFS opportunities have become a lucrative market for fantasy-based sites like PrizePicks and Underdog Fantasy.
What is causing the regulatory stir?
Regulators argue that the legal uncertainty surrounding pick’em-style games has led many people to mistakenly perceive them as unrestricted sports betting.
DFS providers in various states, including those without a legal sports betting framework, have been offering paid pick’em contests under the remit of fantasy gaming, making them increasingly popular in all states.
The Florida Gaming Control Commission was first to act last month and issued cease-and-desist letters to numerous operators of fantasy sports offering these products.
Their concern primarily revolves around the notion that these games closely resemble mobile sports betting, creating potential confusion and risk.
Last week, the New York State Gaming Commission (NYSGC) passed a ban on pick’em-style fantasy sports games within the state.
Concurrently, Michigan is on the brink of enacting a similar ban, with the Michigan Gaming Control Board signalling its implementation by the end of October.
What DFS operators say
The Coalition for Fantasy Sports (CFS), representing companies such as PrizePicks, Sleeper and Underdog — has come out in opposition to regulators deciding to crack down on prop betting activity.
Their main argument is that pick’em contests are essentially a game of skill, and therefore lie outside the traditional definition of “gambling.”
It is the DFS providers’ position that players partaking in pick’em contests have control and are using their skills to play against the house.
What next?
Analysts foresee a growing trend where further US states will implement stricter regulations or outright bans on pick’em contests.
They also predict that DFS contests will continue to be a subject of ongoing debate within the broader US legal sports betting industry.
Meanwhile, the CFS has demonstrated its commitment to cooperating with regulatory authorities.
It said: “We will continue to collaborate with regulators and policymakers to offer the innovative fantasy sports products that customers desire and enjoy.”