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New York Regulators Pull Plug On Certain DFS Contests

Written By Derek Helling on October 4, 2023
statue of liberty beside dfs logos

Companies that have been offering controversial “daily fantasy sports” contests are now on the thinnest of ice with gambling regulators in New York. That figurative ice is as thin as the paper that new DFS regulations are printed on.

The New York State Gaming Commission’s (NYSGC) busy Tuesday not only involved finalizing new rules for DFS contests in the state but strengthening sportsbook advertising regulations and paving the way for a new sportsbook operator’s entry into New York as well. The meeting could have impact  beyond the state’s borders.

New York finalizes new DFS rules

The definition of what is and isn’t a daily fantasy sports contest has been muddled lately. On Tuesday, NYSGC members made a move to clear that up. They voted to finalize new rules on the activity in their state.

Of greatest relevance, the new rules include a provision that DFS contests “shall not be based on proposition betting and shall not have the effect of mimicking proposition betting.” Additionally, the new regs also state that “contests in which a contestant chooses whether an individual athlete or a single team will surpass an identified statistical achievement” are prohibited.

That language is a clear limitation on the kinds of pick ’em contests that operators like Betr, PrizePicks, and Underdog Fantasy have been offering to New Yorkers. New York isn’t the only state taking aim at such games, either.

Implications of the new rules for Betr, etc.

Last week, the Florida Gaming Control Commission sent letters to Betr, PrizePicks, and Underdog instructing them to stop accepting paid entries from players in the state. The reasoning behind that order was similar; the pick ’em style games are tantamount to sports wagering and not DFS contests.

Regulators in Michigan have also been working on new rules to specify what is and isn’t permissible within the realm of DFS. Sam McQuillan of Legal Sports Report stated that those tentative rules are currently pending approval from Michigan’s secretary of state.

Michigan’s potential and New York’s final enactment of such regulations could spur similar activity in other places. That might depend on how the DFS operators react, too.

At this point, it’s unclear whether New York’s new rules alone will be sufficient to change how those companies operate in New York. At the very least, it seems continuing to accept paid entries for such contests from players in the state is a legal risk.

As Betr, PrizePicks, and Underdog are weighing their options, the NYSGC had other business it attended to.

New sportsbook advertising standards limit language

Many states with legal online sports betting have enacted restrictions on the language that licensees can use in their marketing. New York now has similar rules in many ways.

The new regulations ban the use of terms like cost-free and risk-free according to Heather Fletcher of Bonus.com. Furthermore, the rules now clarify that regulators can sanction licensees for making statements in their advertising that regulators deem false.

Finally, it’s explicitly against the online sports betting regs in New York for operators to market to people under the age of 21 now. The same goes for people who may have a behavioral issue connected to gambling.

These rules give regulators more leverage to potentially police sportsbooks’ activity. One of those sportsbooks will soon be Fanatics.

Fanatics set to take PointsBet’s place in New York

Since Fanatics agreed to acquire PointsBet’s US operations, it has revamped PointsBet’s operations in eight states. New York was not among them. That could change soon, though.

Mike Mazzeo of Legal Sports Report reports that the NYSGC approved of Fanatics’ takeover of PointsBet’s license on Tuesday. New Yorkers should also note that when the transition occurs, it will feature the Fanatics Sportsbook replacing PointsBet.

In other states, Fanatics has simply re-branded PointsBet to “PointsBet, a Fanatics Experience.” That will not be the case in New York, though. Right now, a timeline for when Fanatics will start taking bets in New York online and PointsBet will cease to do so is uncertain.

What is clear is that Tuesday’s meeting was rather productive for the NYSGC.

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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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