Michigan sports fans will have the option to bet on NFL games online all season for the first time in history. That’s likely to take a little shine off daily fantasy sports, the once-new toy for fans.
In Lansing, protections for players are up for discussion as the rulemaking process continues for fantasy contests. These talks stem from the December 2019 state laws, which also allowed for regulated online sports betting and internet gaming.
Latest on Michigan laws, rulemaking process for fantasy contests
As part of the package of laws for sports betting and online casinos, Gov. Gretchen Whitmer approved Act No. 157 on Dec. 19, 2019.
The Fantasy Contests Consumer Protection Act lets fantasy contest operators legally host games as rules are finalized.
In addition to Act No. 157, much like sports betting and internet gaming, rules have to be drafted by state regulators and passed by a legislative committee in Lansing.
The Michigan Gaming Control Board has drafted 52 pages of rules. Stakeholders had until this week to give input into the drafts.
The rest of the process should include a Regulatory Impact Statement, a public hearing and passage through the legislative Joint Committee of Administrative Rules, among other steps.
Rules, act provide protection from DFS data sharks
In the early days of daily fantasy sports, sharks drove many casual players away. Some used automated computer scripts to submit multiple lineups, taking most of the pots (and much of the fun( away from DFS.
However, the laws build protections against what the act calls “highly experienced players.”
Once a player has entered 1,000 different contests or won more than three prizes valued at $1,000 or more, players then fall into this category.
The operator must use a symbol denoting this player’s status for all other players to see, and operators must offer beginner contests that these players cannot enter.
The rules also spell out who cannot play. Banned players include those affiliated with the league in the contest, including coaches, players, managers and officials.
In addition, an individual who “has the authority or ability to influence the performance of an athlete in an athletic event,” or has “access to non-public, exclusive information related to an athlete or athletic event,” cannot participate.
You can’t pick all Detroit Lions for your daily fantasy team
Another interesting wrinkle from the draft fantasy contest rules: A fantasy contest player from cannot have a team composed of the entire roster of a real-world sports team. Nor can a team be composed entirely of individual athletes of the same real-world sports team.
So, your team can’t consist of the entire Detroit Lions roster, and your full team can’t be all Lions. Consider your big-money dreams crushed (tongue planted firmly in cheek).
Some of these protections are to ensure that daily fantasy is a separate entity from regulated Michigan sports betting, which launched online on Jan. 22.
There’s also no auto-draft functionality for daily fantasy sports. But they are allowed in season-long fantasy draft contests.
In addition, you can play daily fantasy sports in Michigan if you are 18 years old and older. That’s a departure from sports betting, which requires you to be 21.
Operators must pay a $10,000 fee for an initial license, with a $5,000 annual fee for license renewal.
DraftKings and FanDuel have shared wallets with their online casino and sports betting products. That setup makes things easier for DFS players.
Eight fantasy contest operators are MI taxpayers
Once the law went on the books in 2019, fantasy contest operators became taxpayers to the state of Michigan. In the meantime, companies could continue to offer fantasy contests until they were either issued or denied a license.
If the companies apply for licenses within 60 days after applications are available, the contests are legal. The MGCB will make applications available after rules are finalized.
In 2020, eight operators paid 8.4% of their reported adjusted revenue as taxes to the state. They were:
- Boom Shakalaka
- Fantasy Football Players Championship
- Fantasy Sports Shark
DraftKings, FanDuel lead Michigan DFS operators
In 2020, fantasy contest operators reported $16.7 million of revenue to the state and paid $1.4 million in state taxes.
DraftKings reported $9.7 million (58.2% market share), while FanDuel had $6.3 million in revenue (37.9% market share). The other companies combined for $653,574 in revenue and a 3.9% market share.
As far as 2021 goes 2021, with football season still to play and expected to carry much of the annual revenue, fantasy contest operators reported $7.0 million in revenue and paid $586,938 in state taxes through May.
DraftKings reported $3.8 million in revenue, good for a 54.5% market share. FanDuel had $2.9 million in revenue this year (41.2% share).