Pick’em DFS pushback intensifies as New York regulator bans format
New York State Gaming Commission approves rules for DFS but excludes against-the-house contests “mimicking” prop betting
Commissioners from the New York State Gaming Commission (NYSGC) have unanimously approved new rules for DFS contests but excluded the pick’em-style format from state-approved games, in the latest setback for the sector.
At a meeting of the regulator on Tuesday (October 3), officials finalized the rules, which include four distinct changes: governing the definitions of what a DFS contest is, registration criteria, permissible contests, requirements for contests, and restrictions on play.
In respect of permissible contests, the NYSGC approved the introduction of statutory standards as well as a requirement that contests “shall not be based on proposition betting and shall not have the effect of mimicking proposition betting”.
“Contests in which a contestant chooses whether an individual athlete or a single team will surpass an identified statistical achievement would be prohibited,” the regulatory rule change stated.
“Registrants would be required to disclose fees, the value of prizes offered, how many contestants have entered each contest and the amount of prizes distributed following the conclusion of each contest.
“Registrants would be required to identify any highly experienced player entering a contest. The proposed rule would prescribe a maximum number of entries per contestant in any contest,” the rule change adds.
Dissenting opinions were submitted to the NYSGC over the rule change by pick’em game operators PrizePicks, UnderDog Fantasy and the Coalition for Fantasy Sports, which represents PrizePicks, Underdog and Sleeper and which insisted pick’em games fall under fantasy sports as games of skill rather than being classed as gambling.
This stance allows them to operate under the Unlawful Internet Gambling Enforcement Act (UIEGA) exemption given to fantasy sports following extensive lobbying by FanDuel and DraftKings in 2016 and 2017 in respect of salary cap DFS games.
Pick’em games involve selecting whether at least two athletes from two different teams will score under or over the line set by the operator, yet opponents have accused this against-the-house format of DFS as being player prop betting masquerading as fantasy sports.
The New York prohibition follows cease-and-desist letters being issued to Underdog Fantasy, PrizePicks and Betr by the Florida State Gaming Commission in September over claims the trio have been operating what amounts to illegal sportsbooks in the state with these contests.
In August, PrizePicks and Underdog were sent similar letters by the Wyoming Gaming Commission. There has also been similar scrutiny of the vertical in Ohio, Massachusetts, Maryland, and West Virginia, with PrizePicks and Underdog voluntarily exiting markets there over the controversy.
In July, FanDuel’s head of state government relations, Cesar Fernandez, accused pick’em DFS firms of “running illegal sportsbooks” at the National Council of Legislators from Gaming States conference.
In an indirect response to this allegation, Underdog Fantasy founder Jeremy Levine accused FanDuel and DraftKings, both heritage DFS operators, of using lobbying and political influence in an anti-competition action against the pick’em format.
Levine alleged that the duo are taking the action out of a failure to innovate in the DFS space.