Pick’em-style fantasy sports operators continue to operate in Florida more than two months after the state gaming regulator sent at least three prominent operators letters ordering them to cease offering contests in the state.
Despite receiving the letters from the Florida Gaming Control Commission on September 19, PrizePicks, Underdog and Betr are still operating pick’em contests in Florida as regulators turn up the pressure in several states against the games.
At its core, the debate over fantasy sports is a lobbying battle between traditional fantasy sports operators and sportsbook operators, such as DraftKings, FanDuel and other casino operators and the burgeoning pick’em segment.
In a white paper obtained by Florida Regulatory Watch that was submitted to the Florida commission on September 27, opponents of the pick’em games make the case that the contests should be prohibited in the state, unfavorably comparing the games to FanDuel’s offerings.
“PrizePicks, Underdog, and Betr use the label 'fantasy,' but they are not fantasy contests,” the white paper reads. “Their games are unlicensed gambling under Florida law because they involve 'bets and wagers' against the house."
“FanDuel’s fantasy sports contests, by contrast, are contests of skill in which contestants select rosters to compete against each other, and thus fall outside the scope of the gambling laws.”
The white paper goes on to say that the proposition-style pick’em contests lack the “elements of skill” that are found in more traditional daily fantasy sport (DFS) contests.
“Rather than requiring players to skillfully build rosters of players, PrizePicks, Underdog and Betr offer simple 'props' tied to the performance of an individual athlete along a particular statistic in a future game."
In addition, the paper argues, that the operators acting as the house rather than offering a contest among relative peers also violates federal laws.
“A proposition bet does not test relative knowledge or skills between participants,” the paper argues. “Users are not competing against any other users — and they do not win based on the performance of their props relative to other contestants’ props. Rather, users of PrizePicks, Underdog and Betr bet against the house."
“They must pick over or under based on lines that the house sets, and that they have no ability to control.”
Beyond the legal arguments against pick'em games, opponents may also have objections for policy reasons.
In Florida, one of the key arguments would be market access, in a state where sports betting is effectively controlled by the Seminole Tribe, and companies such as FanDuel and DraftKings have unsuccessfully pursued ballot initiatives in an attempt to offer sports betting in the state.
Elsewhere, opponents have argued that the pick’em contests are an effective way to circumvent higher sports-betting taxes, particularly in New York, where sports betting is taxed at 51 percent while fantasy sports contest revenues are taxed at a significantly lower 15 percent figure.
“Reading this pro-‘traditional’ DFS white paper highlights the issues that gaming regulators face,” wrote Daniel McGinn, an attorney for the Florida-based Dean, Mead and Dunbar law firm in a LinkedIn post.
“The ‘our games are fine, but our competitor, they’re clearly outside the law’ positions that are offered up by industry representatives when neither side is in the right, combined with a vocal public fanbase of the activities at issue … creates a scenario where 'the state' is the bad guy for arguably doing their job correctly.”
“This question is not as simple nor as decided as FanDuel makes it sound,” McGinn added. “If it was, they wouldn’t have engaged so heavily in efforts to amend the laws and the state constitution in years past and wouldn’t be so active today.”