Entering a new year often represents a chance for a clean slate or to embark on new beginnings. However, day-to-day fantasy sports apps carried with them into 2024 the burdensome regulatory atmosphere that existed in the previous year.
The constant regulatory conflicts over pick’em games were deemed the top story of the past year, according to votes from the LSR team.
Regulatory authorities in ten states have either recently prohibited or are contemplating the prohibition of pick’em DFS games featuring player versus house. These allow users to make wagers on the performance of different athletes for the opportunity to win a payout multiple times their entry fee.
The states engaged in these regulatory actions include:
Arizona California Florida Maine Michigan Mississippi New York North Carolina Virginia Wyoming 2023 witnessed Wyoming become the first state to initiate the series of regulations against daily fantasy sports in July. Renowned pick’em operators, PrizePicks and Underdog Fantasy, received their initial cease and desist orders following the Wyoming Gaming Commission’s receipt of an article concerning these companies from a sports betting lobbyist.
Despite these orders, both companies continue to operate in Wyoming. About a week after these letters were sent, FanDuel’s Head of State Government Relations, Cesar Fernandez, publicly commented on the illegal operations of companies posing as fantasy sports operators.
In response, some companies have accused DraftKings and FanDuel of applying pressure on regulators to limit competition.
The regulation-hit companies are adjusting their strategies in light of the regulatory hurdles, evolving from traditional season-long formats to daily drafts and pick’em contests. For instance, Underdog switched its pick’em games to a peer-to-peer format in various states late last year. They plan to expand it to other states as well.
Similarly, PrizePicks converted its Michigan-based games to a free-to-play format and will likely spread this model to other states.
Sports betting platforms introduced new products to compete. DraftKings introduced its version of pick’em and intends to debut this peer-to-peer approach in other states.
The largest markets that pick’em operators risk losing are resistant to legal sports betting markets. Years after former Attorney General Kamala Harris declined a similar request to scrutinize the legality of DFS pick’em games, California Attorney General Rob Bonta is examining the legality of DFS pick’em games.
While DFS companies might receive protection under a new bill introduced in Florida’s legislature, New York’s finalized rules indicate a ban on proposition betting-based fantasy contests.
The difference in operating expenses between being licensed as either DFS or sports betting isn’t exclusive to New York. Betr, a relative newcomer to sports betting, described pick’em as much less financially demanding compared to online sports betting.
More states are preparing to revise their DFS regulations. Vermont, Virginia, and North Carolina are among those poised for reviews, ensuring that the issues surrounding pick’em games will continue to be a hot topic in 2024.
