Daily fantasy sports are on the ropes in Virginia.
The state’s attorney general, Jason S. Miyares, has issued a letter essentially saying that daily fantasy sports (DFS) and fantasy sports apps that offer bets on individual player performances are offering sports betting. His goal is snapping shut the loophole through which DFS and fantasy apps were funneling revenue.
In the letter Miyares wrote to Del. Wren Williams, who requested an opinion on the matter, he said:
“It is my opinion that when a customer places a bet related to individual athletes’ performance metrics, the outcome of which is determined by reference to a contest operator’s established baseline rather than choices made by other customers the customer is engaged in sports betting and not a fantasy contest.”
Are you competing against the house? If so, then it’s sports betting
Virginia’s Fantasy Sports Act is the law for fantasy contests. The act boils fantasy contests down to three main characteristics, Miyares pointed out:
- You know what the prizes are before you enter the contest.
- Players compete against each other and winners are those with the best point total
- Outcomes aren’t based on a single performance or event
In other words, according to Virginia law, a fantasy contest resembles what most fantasy managers are used to: You pay an entry fee to enter a league in which there are typically 10-14 other managers.
Players build rosters through a draft, and then managers compete against each other according to a regular season schedule. When the regular season finishes the top teams face off in the playoffs.
DFS is slightly different than standard fantasy sports in that you pay an entry fee to enter a group of contestants or a head-to-head matchup. Managers have a set amount of money to build a roster. And the roster that generates the most points is the winner. In some cases, managers build their roster through a draft.
However, the advent of sports betting in 2018 brought massive changes to the fantasy and DFS landscape. Fantasy apps started offering prop bets, such as gambling on whether a pair of players would go over or under a yardage total for each player set by the app (“the house”), where users compete against the house and not other managers.
Those types of contests, Miyares noted, are not fantasy sports contests but sports betting:
“‘Sports betting’ is a form of gambling where individuals wager on the outcomes of actual sporting events or specific statistical performances against the betting operator or house. Unlike fantasy contests, no specific entry fee is required, and the performance of other bettors is irrelevant…
The key distinctions thus lie in the fact that the results of sports betting can be determined by a specific performance of an individual athlete, and without direct competition between bettors, as is the case in ‘fantasy contests.'”
Why is this significant? While fantasy sports and DFS apps might be able to argue that offering the over-under on at least two players (as is the custom for these apps) isn’t a bet on individual performance, they’re relatively defenseless against the fact that many of them offer bets in which the manager is competing against the house, not other managers.
What’s ahead for Virginia DFS and fantasy sports?
In all likelihood, Virginia lawmakers will ban any “wagers” offered in fantasy sports apps where the user competes against the house. Sports betting operators are a jealous bunch, and they don’t want DFS and fantasy apps squirreling away some of their revenue.
And, in September, the Florida Gaming Commission sent cease-and-desist letters to Betr, PrizePicks, and Underdog Sports, asking them to stop offering prop-style bets.