Daily Fantasy Sports Regulations Ban Prop Contests Because They Mimic Sports Betting

Written By David Danzis on August 8, 2023 - Last Updated on October 6, 2023
yahoo sports daily fantasy contest on phone

Gaming regulators in New York have decided that those daily fantasy sports contests that look and feel an awful lot like NY sports betting are, in fact, a bit too much like the real thing.

In an Aug. 2 update to the public Register, the NY State Gaming Commission determined that the proposition contests found on certain interactive fantasy sports sites are “essentially sports betting.”

Accordingly, the commission rejected a commenter’s request to amend proposed DFS regulations banning prop contests “that have the effect of mimicking proposition betting.”

Specifically, the new rules state:

“Contests in which a contestant must choose, directly or indirectly, whether an individual athlete or a single team will surpass an identified statistical achievement, such as points scored, are prohibited.”

The commenting period for the proposed revisions to daily fantasy sports rules is open until Oct. 5. No public hearing has been scheduled for the amendments, according to state records.

DFS sites say they are not offering sports betting

While not explicitly stated, the NYSGC rules directly address player vs. house contests made popular by sites such as Underdog Fantasy and PrizePicks. The two upstart companies maintain that their products adhere to the Unlawful Internet Gambling Enforcement Act and are not, in fact, subject to gambling regulations.

New York is the fourth state to take issue with that stance.

According to Legal Sports Report, regulators in Wyoming sent Underdog and PrizePicks cease-and-desist letters in July, which both companies apparently never received. Maine gambling officials sent the companies complaint notices last month. Ohio, whose regulators have entered the legal gambling space with zeal and purpose, is currently investigating a handful of DFS sites it believes are acting as pseudo-sportsbooks.

No surprises in submitted comments on DFS regs

As for the New York regulations, the industry seems to be paying attention. Six public comments were received for the IFS changes in the Register. Four of the comments were from DFS operators with current temporary approval in the state: DraftKings, FanDuel, Fantasy Football Players Championship and Yahoo! Fantasy Sports.

Vivid Seats, it was noted, is not currently permitted to operate daily fantasy sports in NY, but may seek registration after regulators act on the current set of rules.

The Fantasy Sports & Gaming Association, a trade organization claiming to represent more than 150 companies offering DFS, also submitted comments.

Sports betting in NY by any other name is still…

As legal online sports gambling has exploded across the US, two companies – FanDuel and DraftKings – have separated themselves from all other operators.

New York-based FanDuel (owned by Dublin-based Flutter Entertainment plc) and Boston-based DraftKings control more than three-quarters of the mobile sports wagering market in the US, according to recent data. For what it’s worth, FanDuel Sportsbook NY and DraftKings Sportsbook NY own around 71% of the NY sports betting market.

The two companies trace their roots to being DFS sites. They were among the primary entities fighting government regulations for years, as well as the public perception that they were basically acting as sportsbooks before PASPA was overturned in 2018.

Today, they find themselves advocating for more DFS regulations in an apparent effort to stifle competition and maintain market dominance. Just a few weeks ago, Cesar Fernandez, FanDuel’s head of state government relations, has this to say while speaking at the National Council of Legislators from Gaming States conference in Denver:

“There are companies today posing as fantasy-sports operators, and they are running illegal sportsbooks.”

Photo by Eric Risberg / AP Photo
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David Danzis

David Danzis is a writer for PlayNY. A New Jersey native and honors graduate of Rutgers University, he served as a newspaper reporter for the New Jersey Herald and Press of Atlantic City, earning statewide awards for his coverage of politics, government, education, sports and business. Today, he contributes to New York's growing legal gambling landscape, including online sports betting and potential legalization of NY online casinos. David lives in Mays Landing with his wife and two children. When not on the beach, a golf course, or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers and Knicks.

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