Underdog Leaves Michigan, Yahoo! Scraps Paid Contests After Fantasy Licensing Changes

Written By Drew Ellis on July 5, 2022
Fantasy football app

In the midst of a busy Independence Day weekend, you may have noticed a change with your fantasy sports in the state of Michigan.

New legislation and requirements for fantasy sports went into effect on Friday, July 1.

The new requirements have led to some companies pulling out of the state, while others have had to alter their offerings.

What does it all mean to avid Daily Fantasy players in Michigan?

New fantasy sports licensing required in Michigan

According to the Michigan Gaming Control Board, operators that met the definition of a fantasy contest operator in Michigan on May 1, 2018 were required by law to apply for a license by July 1, 2022, in order to continue offering fantasy contests in the state.

“Licensing is a key step in fulfilling the requirements established by Michigan’s Fantasy Contests Consumer Protection Act,” said Henry Williams, MGCB executive director. “I urge operators to file soon for licensing so current operators can continue to participate and new ones can join them once rules have been approved by the Michigan Legislature.”

The MGCB’s proposed fantasy contest draft rules were submitted to the Michigan Legislature on April 27 for review.

The Fantasy Sports & Gaming Association has praised Michigan’s regulatory environment.

“Companies that were not operating in the state before the law was passed need to exit and re-apply,” Peter Schoenke, an FSGA board member, told LegalSportsReport.com. “Michigan is a state with a good regulatory environment that allows for operators of all sizes to enter. It doesn’t have any major issues as far as the FSGA is concerned.”

Underdog Fantasy, Yahoo forced to make changes

Just this past week, DFS operator Underdog Fantasy pulled its product out of Michigan, citing the new regulations in place.

“Unfortunately because of some regulation changes we have had to stop operating in MI at the moment,” Underdog Fantasy told LegalSportsReport.com. “We are exploring our options to be able to operate there again but there is no timeline for that just yet.”

Underdog Fantasy was founded in 2020, so it didn’t qualify for the grandfathered registration that companies established prior to May 2018 were given.

One of the grandfathered companies, Yahoo, sent an email to its users on Friday indicating it would no longer offer paid fantasy contests to Michigan players. Included in that is Daily Fantasy, Best Ball, Matchup Challenges and Prize Leagues.

Any MI player that entered a paid contest prior to July 1 would be able to complete their contest or league. However, no new entries or deposits would be permitted.

Yahoo did indicate that it hopes to offer these playing options again in the future.

How fantasy sports licensing is issued

The MGCB may issue two types of licenses.

An operator license is needed to conduct or offer fantasy contests for play. A management company license handles the day-to-day fantasy contest operations for an operator.

Michigan requires submission of commercially reasonable procedures and internal controls in order to protect the public and ensure integrity of the contests. Key personnel must also be qualified by the MGCB.

State law defines a fantasy contest as a simulated game or contest with an entry fee that meets certain conditions. A fantasy contest may not be offered at:

  • A kiosk or machine physically located in a retail business, bar, restaurant or other commercial establishment.
  • A place of public accommodation.
  • A facility owned, operated or occupied by a private club, association or similar membership-based organization.

The initial operator’s license fee is $10,000, and the annual license renewal fee is $5,000. In its draft rules, the MGCB proposes a $5,000 management company initial licensing fee and a $5,000 annual renewal fee. The MGCB may assess the operators or companies investigative costs if they exceed the initial license or renewal fee.

Michigan’s Fantasy history

The Fantasy Contest Consumer Protection Act took effect in the state at the end of 2019.

Operators registered with the MGCB include:

  • Boom Shakalaka
  • DraftKings
  • FanDuel
  • Fantasy Sports Shark
  • FFPC
  • FullTime
  • PrizePicks
  • RealTime Fantasy Sports
  • SportsHub
  • Yahoo

Like sports betting, Michigan taxes monthly fantasy contest adjusted revenues at 8.4%.

Fantasy contest taxes are paid into the Fantasy Contest Fund. The fund provides the MGCB its costs of regulating and enforcing fantasy contests. The remainder of the money is put into the Michigan School Aid Fund.

Photo by Shutterstock
Drew Ellis Avatar
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Drew Ellis

Drew Ellis is the Lead Writer for PlayMichigan, and has contributed for multiple Play sites around the Midwest. Working in sports media since 1998, Ellis has over a decade covering sports betting before expanding into US casino markets in 2020.

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