New York Decides DFS Pick’Em Contests Don’t Fall Under Legal Sports Betting

Legal sports betting has become more widespread in America, causing some confusion about what activities are permitted. However, certain states are working to clarify which types of betting are allowed under their regulations. Recently, Daily Fantasy Sports pick’em gaming has caught the attention of regulators and legislators.

New York sportsbooks are now offering pick’em and player prop Over/Under fantasy contests, following in the footsteps of states like Florida and Ohio who have deemed these contests to be illegal sports gambling.

The New York State Gaming Commission convened on Tuesday and unanimously approved a measure that effectively prohibits DFS sites from offering player prop Over/Under fantasy contests in the state.

The commission’s decision will impact major New York sports betting apps like FanDuel and DraftKings, as well as other competing DFS-only platforms such as PrizePicks and Underdog Fantasy.

The issue

DFS providers in multiple states, even those lacking a legal sports betting system, have been providing paid pick’em contests disguised as fantasy gaming, when in reality they are engaging in sports betting.

These contests are growing in popularity as a betting option for individuals in all states. However, the issue is that these contests closely resemble sports betting options offered by licensed and regulated sports wagering platforms that pay licensing fees in their respective jurisdictions.

DFS providers are exploiting ambiguous language in the rules regarding prop-type bets in certain states, such as Over/Unders. New York regulators are trying to clarify the situation by implementing new, clear rules that prohibit these types of contests in the state.

The new rule states that contests cannot involve proposition betting or simulate proposition betting. Contests where participants must predict if an individual athlete or team will exceed a specific statistical milestone, like points scored, are not allowed.

If DFS providers want to provide these opportunities, they should be regulated, required to adhere to the same rules, and pay the same licensing fees as authorized sports betting providers in their respective markets.

The arguments for DFS providers

The recent regulations pose a significant challenge to DFS providers in New York. The Coalition for Fantasy Sports (CFS) strongly opposes the New York State Gaming Commission’s crackdown on DFS and prop betting in the state.

The primary point they are making is that pick’em contests involve skill rather than chance, making them distinct from traditional forms of gambling. According to DFS providers, participants in pick’em contests have agency and are able to use their abilities to compete against the house.

Some argue that the recent regulations for New York sports betting apps only serve to further solidify the dominance of FanDuel and DraftKings, two providers already well-established in the market, due to their generous promotions and high market share.

The Coalition for Fantasy Sports (CFS) believes that having a diverse range of contest styles fosters innovation. However, CFS also warns that the suggested regulations could further entrench DraftKings and FanDuel’s dominance in the DFS market.

Not to be deterred

These DFS gaming opportunities have become lucrative ventures for fantasy-based platforms like PrizePicks and Underdog Fantasy. It seems that these companies, along with others hosting contests, are determined to continue with their current approach to pick’em gaming and may even face some competition.

An Underdog Fantasy spokesperson stated that they will collaborate with the gaming commission to ensure compliance with the newly established fantasy sports regulations in New York.

Afterwards, a representative from PrizePicks added: “We are in frequent communication with the NYGC regarding the future of fantasy sports in New York. We appreciate the support of our numerous members in the state and are committed to collaborating with policymakers to ensure that they can enjoy the fantasy sports they are passionate about.”

More to come?

The New York ruling prohibiting player prop Over/Under daily fantasy contests has brought attention to pick’em contests offered by DFS providers nationwide.

New York is now the fourth state to ban “gambling” practices, and more states are likely to follow suit. Licensing and regulating sports betting has been beneficial for the industry in the U.S., but DFS providers often avoid the regulatory process.

Anticipate that DFS contests will continue to be a contentious topic in the US legal sports betting industry, particularly if changes in regulations impact the profitability of major players FanDuel and DraftKings.