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

The explosion of legal sports betting across America has blurred some lines, but some states are aiming to provide clarity as to which types of activities are allowed under their rules. Daily Fantasy Sports pick‘em gaming is the latest wagering opportunity to receive some attention from regulators and lawmakers.

New York sportsbooks are the latest to target pick'em and player prop Over/Under fantasy contests. The Empire State joins Florida and Ohio as states that feel such contests cross the line and constitute what amounts to illegal sports gambling.

On Tuesday, the New York State Gaming Commission met and effectively ended DFS sites' ability in their state to provide player prop Over/Under fantasy contests. The measure was unanimously approved by the commission.

Some big New York sports betting apps will be affected by the commission's decision, including FanDuel, DraftKings, and competing DFS-only names such as PrizePicks and Underdog Fantasy.

The issue

DFS providers in various states, including those currently without a legal sports betting framework have been offering paid pick'em contests under the guise of fantasy gaming, rather than what they really are, which is sports betting.

These contests have become an increasingly popular betting choice for those in all states. The problem is that such contests mimic sports betting opportunities available at participating, licensed sports wagering platforms that are regulated and paying a licensing fee in their various jurisdictions.

It seems that DFS providers are taking advantage of some muddy waters in terms of the wording of the rules of prop-type bets in participating states, including Over/Unders. New York regulators attempt to clear that murkiness with new, straightforward rules against such contests existing in the Empire State.

“Contests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting," the new rule reads. "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.”

If DFS providers are to offer such opportunities, they should, in essence be regulated, be forced to follow the same rules, and pay the same licensing fees as approved sports betting providers in their markets.

The arguments for DFS providers

The new rules are a direct threat to DFS providers in New York. The Coalition for Fantasy Sports (CFS) has come out in opposition to the New York State Gaming Commission's decision to crack down on DFS/prop betting activity in their state.

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.

There is also the argument that the new rules for New York sports betting apps only act to strengthen the position of FanDuel and DraftKings, two providers that certainly don't need any help, with the high NY sportsbook promos they offer, in gaining market share.

"CFS stated that a variety of contest styles encourages innovation. CFS stated that the proposed regulations ‘would serve to solidify the IFS market domination by DraftKings and FanDuel," according to the Coalition for Fantasy Sports.

Not to be deterred

These DFS gaming opportunities have become big business for such fantasy-based sites as PrizePicks and Underdog Fantasy. It appears those companies and others practicing contests will fight to an extent, and even carry on with their current stance on the pick'em gaming process.

“We will continue to work with the gaming commission to ensure we operate under the finalized fantasy sports rules,” an Underdog Fantasy spokesperson said on New York's rule change.

A PrizePicks spokesperson followed by saying: “We are meeting regularly with the NYGC to discuss the future of fantasy sports in New York. We are grateful for the advocacy efforts of our many members in the state and will work with policymakers to ensure that they can continue to play the fantasy sports they know and love.”

More to come?

With the New York decision to effectively ban player prop Over/Under daily fantasy contests in the state has come an increased spotlight on such pick'em contests offered by DFS providers around the country.

New York becomes just the fourth state to officially ban such "gambling" practices, but it likely won't be the last. Licensing and regulation of sports betting has generally been good for the industry in the U.S., and DFS providers largely skirt the regulation process.

Expect DFS contests to remain a hot-button issue in the broad U.S. legal sports betting industry, especially if new rules start to affect the bottom line of heavyweights FanDuel and DraftKings.