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New Michigan gambling regulations prohibiting prop bets and other sports betting mimicry in fantasy sports apps are now effective. The new rules came after New York enacted similar rules less than 10 days ago, signaling a significant shift in the country’s fantasy sports market.
Known as the Fantasy Sports Contests Consumer Protection Act, the new set of rules crafted by the Michigan Gaming Control Board (MGCB) will presumably end prop-style bets offered by fantasy sports apps such as Underdog and PrizePicks.
Fantasy sports apps exploit loopholes as sports betting grows
Since the US Supreme Court ended the Professional and Amateur Sports Protection Act in 2018, sports betting has exploded into an industry generating billions of dollars in gambling and revenue over the past five years.
More than 30 states offer some form of legal sports betting, which allows operators like FanDuel, DraftKings, and BetMGM to offer bets such as prop bets, moneylines, and over-under.
Not to be forgotten in the flood of sports betting across the country are fantasy sports apps that offer sports wagers without being state-recognized sports betting apps.
Fantasy sports prop bets pose threat to competitors, regulatory integrity
In states where sports betting is legal, fantasy sports prop and pick ’em bets are an issue for licensed sports betting operators who want to tamp down competition from platforms that aren’t licensed to offer sports bets.
In states where sports betting is illegal, such as Florida, fantasy sports apps have found a loophole through which they’re cramming as much sports betting action as they can. For example, Sleeper offers parlay bets in which users have to string together at least two prop bets related to player performance.
This has long been a point of regulatory hypocrisy: How can a state like Florida claim that sports betting is illegal but still allow fantasy sports apps to offer prop bets? Michigan’s new set of DFS rules will bring an end to that, as it will target fantasy sports operators offering betting.
Executive Director Henry Williams said in an MGCB press release:
“Fantasy contests, like any other form of competitive gaming, thrive on rules and regulations. The Administrative Rules, which were reviewed by the Michigan Legislature, provide a level playing field for all fantasy contest operators and participants, and will help ensure that fairness, transparency, and integrity are upheld.”
“Fantasy contest operators or licensed management companies may not offer any contests that have the effect of mimicking betting on sports, or that involve ‘prop bets’ or the effect of mimicking proposition selection,” the MGCB noted.
To Florida’s credit, its regulators recently sent cease-and-desist letters to three fantasy sports platforms—Underdog Sports, PrizePicks, and Betr—that offer prop-style bets.
