New York regulators have adopted new rules that will prohibit the state’s licensed fantasy sports operators from offering “pick ’em” style contests that resemble parlay-style betting.
The New York State Gaming Commission voted unanimously on Tuesday (October 3) to adopt a set of new regulations to govern daily fantasy sports (DFS) operations in the state, in accordance with a state law originally passed in 2016.
Included in the regulations is a provision that restricts companies from offering the form of pick ’em-style contests that have surged in popularity in recent years in which players can select multiple over/under player propositions as part of the contest.
The newly-adopted rules specify that fantasy contests in New York may “not be based on proposition betting or contests that have the effect of mimicking proposition betting.”
“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 rules further specify.
The rules were opposed by the Coalition for Fantasy Sports, a group that includes leading prop-style fantasy operators PrizePicks, Underdog Fantasy and Sleeper.
In public comments submitted to the six-member commission, the coalition said the regulations were inconsistent with the state’s enabling legislation for daily fantasy sports, and that the rules would restrict competition because they “would serve to solidify the … market domination by DraftKings and FanDuel.”
According to a summary provided by the gaming commission, the coalition argued that pick ’em contests are games of skill just as traditional DFS contests are within the meaning of both the state’s 2016 enabling legislation and subsequent court decisions after the legislation was challenged in a bitter legal fight that spanned several years.
“Pick ’em participants … pit their fantasy lineups against projected fantasy sports points or single-statistic totals, which is akin to the fantasy lineups of fellow participants,” the coalition wrote in its comments.
“We will continue to work with the gaming commission to ensure we operate under the finalized fantasy sports rules,” an Underdog Fantasy spokesman said in an email following Tuesday’s meeting.
Mojo Interactive, a licensed sports-betting operator in New Jersey which recently launched a proposition-style fantasy game with a stock market mechanism, said in its own comments that the rules “cast too wide a net,” arguing that the commission was really targeting house-banked contests rather than games with proposition-style events.
“The commission is attempting to target products that fall outside the scope of fantasy, not because they rely on predicting player statistics, but because they allow patrons to compete against the house, provide a direct payout from the house based on pre-determined odds, and do not require contestants to compete against one another, and therefore cannot be based on the relative skill of the contestants,” Mojo wrote.
Instead, Mojo wrote, the rule, “while intending to target these specific practices, will have the unintended effect of outlawing a wide range of appropriately constructed, skill-based fantasy games.”
The commission’s responses to the coalition’s claims were redacted from the publicly released comments, and the commission did not have any further comments regarding the rules during Tuesday’s meeting, except to say that officials would continue to review comments as they came in from a public campaign conducted by PrizePicks to encourage its New York-based players to lobby against the proposed rules.
That campaign has resulted in more than 1,400 comments being sent to the commission so far.
"We are meeting regularly with the NYGC to discuss the future of fantasy sports in New York," a PrizePicks spokeswoman said. "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."
The New York rulemaking decision comes as a second major blow in recent weeks to the burgeoning prop-style DFS industry, following a September 19 letter from the Florida Gaming Control Commission to PrizePicks, Underdog and Betr ordering them to cease operating the pick ’em style games.
“Under Florida law, betting or wagering on the result of contests of skill, such as sports betting, including fantasy sports betting, is strictly prohibited and constitutes a felony unless such activity is otherwise exempted by statute,” Louis Trombetta, executive director of the Florida Gaming Control Commission, wrote.
Regulators in Michigan are also preparing to adopt formal rules to expressly ban fantasy games that mimic proposition sports bets.
In recent months, Massachusetts regulators have also committed to examining the lines between fantasy games and sports betting, while officials in Maine and Wyoming have sent letters of concern to operators regarding pick ’em contests.