The online real money gaming world is characterized by rapid innovation, constantly challenging state gaming laws. Regulators and legal bodies are increasingly focusing on daily fantasy “Pick ‘Em” style games, often referred to as “DFS 2.0”. Operators who run fantasy sports platforms, particularly those featuring these “Pick ‘Em” contests, must diligently assess the risks associated with offering these games across different states and territories. Furthermore, businesses that support these operators, including service providers, payment processors, affiliates, marketers, and platforms, should also be aware of the potential legal ramifications, as involvement with “Pick ‘Em” games could lead to penalties, criminal charges, and class action lawsuits.
This article will delve into the evolution and mechanics of “Pick ‘Em” games within the Sportspick Online industry. We will highlight critical state-level developments and provide guidance on how businesses can minimize risks in this dynamic environment.
The Shift from Traditional DFS to Sportspick Online “Pick ‘Em” Formats
Online daily fantasy sports games have been a part of the digital entertainment landscape for over a decade. The original iteration, “DFS 1.0,” centered around peer-to-peer contests. Typically, a sportspick online platform would collect entry fees, organize contests based on real-world sporting events, manage rules, and distribute winnings to contest winners. Many of these contests utilized a salary cap format, where users drafted teams of athletes within a budget, with performance in real games determining outcomes.
“DFS 2.0,” and its manifestation in sportspick online “Pick ‘Em” formats, represents a significant departure. Unlike traditional DFS, “Pick ‘Em” games are played against the house, not against other users. On a sportspick online platform offering “Pick ‘Em,” users select a number of athletes and make predictions on their statistical performance, typically choosing “Higher” or “Lower” than a set projection. Participants play directly against the platform, with payouts determined by the accuracy of their predictions, often at odds similar to sports betting parlays – prizes increase with the number of correct picks. This shift has placed sportspick online “Pick ‘Em” games under increased scrutiny.
Regulatory Scrutiny of Sportspick Online “Pick ‘Em” Games
Critics argue that these sportspick online “Pick ‘Em” daily fantasy games are essentially sports betting, disguised as fantasy sports. As the President of the American Gaming Association stated, they can be seen as “unlicensed sports betting masquerading as daily fantasy products.” Consequently, numerous states are prioritizing enforcement and enacting new legislation to address this perceived issue within the sportspick online gaming sector. Recent key developments underscore this trend:
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Massachusetts: The Attorney General’s office issued cease and desist orders to ten fantasy operators in February, classifying “Pick ‘Em” style games as “sports betting” under state law. This action signaled a firm stance against certain sportspick online offerings in the state.
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Ohio: The Ohio Casino Control Commission approved the NCAA’s request to prohibit player-specific prop bets on college athletes, impacting the scope of permissible offerings for sportspick online platforms in Ohio, especially concerning college sports.
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Arkansas: The Department of Finance and Administration sent cease and desist letters in February to Daily Fantasy Sports operators, including Underdog and PrizePicks, alleging they were offering unlicensed sports betting, directly challenging the legality of their sportspick online “Pick ‘Em” games under the Arkansas Constitution.
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New York: PrizePicks ceased operating “Pick ‘Em” style contests in New York and agreed to pay nearly $15 million for operating without a license. New York Rule 5602.1(a)(4) explicitly outlawed fantasy sports contests based on proposition betting, significantly impacting the sportspick online landscape in the state. Thrive Fantasy also ceased operations in New York, further demonstrating the regulatory pressure.
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Florida: Following prior warnings, the Florida Gaming Control Commission cautioned three sportspick online fantasy sports operators about potential criminal prosecution if they continued operating in the state. PrizePicks indicated plans to shut down in Florida, reflecting the serious legal risks.
States like Kansas, Maryland, Maine, Michigan, Wyoming, and Virginia have also expressed concerns or taken action regarding “Pick ‘Em” games. California and more states are expected to follow, indicating a widespread trend of regulatory tightening on sportspick online platforms offering these game types. In response, some companies are adjusting their offerings, exploring peer-to-peer and free-to-play models in states with stricter regulations, signaling an adaptation within the sportspick online industry to these legal challenges.
Risk Mitigation for Businesses in the Sportspick Online Ecosystem
This crackdown on DFS 2.0 and “Pick ‘Em” games serves as a critical reminder of the legal complexities facing operators and related businesses in the rapidly changing sportspick online gaming industry. To minimize risk, businesses should consider the following steps:
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Operational Assessment: Evaluate your business operations and contracts to determine if you are operating a sportspick online platform or conducting business with operators that offer real money gaming, particularly “Pick ‘Em” style games.
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Contract Due Diligence: Thoroughly review contracts with operators and conduct necessary due diligence. Assess the nature of your relationship and the potential risk of being seen as aiding and abetting unlicensed or non-compliant operations.
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Offering Review for Operators: Sportspick online operators should review their current game offerings, state statutes, regulations, and regulatory positions on “Pick ‘Em” games to accurately assess their risk exposure in each jurisdiction.
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Regulatory Monitoring: Continuously monitor developments from state gaming commissions and legislative actions at both state and federal levels. The legal landscape for sportspick online gaming is dynamic and requires ongoing vigilance.
For businesses navigating the complex legal and regulatory environment of sportspick online gaming, seeking expert legal counsel is crucial. Understanding and adapting to these evolving laws is essential for sustainable and compliant operations in this exciting but challenging industry.
