Daily fantasy sports operators are coming under scrutiny in Michigan because they may be acting like something they aren’t.
DFS sites such as PrizePicks, which operates in Michigan, are illegally offering prop bets in their apps according to DraftKings and FanDuel, the two largest sports betting operators in the country. State regulators are proposing new regulations to possibly deal with that.
Under Michigan law, online sports betting is regulated by the Michigan Gaming Control Board, which is proposing a ban on fantasy contests that would mimic betting on sports.
But the smaller, lesser known DFS operators say they’re being picked on in an effort by FanDuel and others to eliminate competition. According to Jeremy Levine, CEO of Underdog Fantasy, a DFS site that operates in several states but not Michigan, the over/under odds offered by his product are within the law.
How daily fantasy sites claim to be within gaming laws
At issue are odds on such events including whether Player A will be Over/Under X number of hits, strikeouts, RBI etc. in an MLB game, for example. That type of fantasy category is too much like a prop bet, says detractors.
According to Levine, Underdog Fantasy (and presumably other DFS operators) are well within regulations when they offer an O/U in their daily fantasy offerings. That’s because it adheres to the guidelines for a DFS player in that the contest requires skill, is predicated on two or more athletes from differing teams, and it’s based on the outcome of those athletes’ statistics in those games.
But, regulators in other states have not agreed. In New York last month, the State Gaming Commission voted to alter its language on DFS sites to preclude them from offering what they deemed to be obvious props bets with O/U odds. Massachusetts has also expressed interest in reviewing the way it regulates the DFS industry.
Proposed revised language by the MGCB would prohibit DFS sites and apps from offering “proposition selection or fantasy contests that have the effect of mimicking proposition selection.”
But Levine disagrees, and argues that the industry leaders are attempting to place a stranglehold on the market, while they also operate sportsbooks of their own.
“Fantasy sports is not limited to only FanDuel and DraftKings’ salary-cap contests,” Levine said in a statement in July.
Is DFS a game of chance, or game of skill?
At the core of the issue of DFS vs. sports betting is the debate on what constitutes the difference between a game of skill and a game of chance. In most states, sports betting is defined as a game of skill, but DFS supporters argue that a game that involves “any” chance, is indeed a game of chance. And if that’s the case, DFS proponents say, daily fantasy sports is a game of chance.
Levine says FanDuel and DraftKings were remarkably similar in function to what Underdog Fantasy and other DFS contests are now.
At stake is the potential for tremendous profits for strictly DFS operators, who can set up shop in large states that do not yet have legal sports betting markets, such as California, Florida, and Texas. If these DFS contest sites are able to offer their “prop-bet-like” offerings, it could be an attractive alternative to consumers in those populous states who cannot legally wager via a sportsbook.
