Colorado’s climate is getting colder, especially for fantasy operators whose offerings appear to regulators as a little bit too much like legal sports betting.
The Colorado Division of Gaming hosted a rulemaking hearing on Monday for proposed regulations for fantasy contests in the Rocky Mountain state, several of which pertain to the ongoing debate around who are sports betting sites and who is offering DFS.
After presenting a somewhat murky slate, the Colorado sports betting regulators updated their proposed rules on Oct. 27 in a much more blunt fashion. Rather than banning "parlay style wagers that are stacked wagers on single athletes," the latest version of the proposed definition for authorized fantasy contests states that offerings "where patrons compete against fantasy contest providers are prohibited."
That definition appears to ban the pick’ems some companies offer, wherein users select two or more outcomes, such as players going Over or Under a point total, to try to win a payout from the house.
Monday getting off to a bit of a spicy start as reps for FanDuel, PrizePicks, and others took part in a Colorado Division of Gaming hearing for proposed fantasy contest rules.
— Geoff Zochodne (@GeoffZochodne) October 30, 2023
Those proposed rules appear to target pick'ems vs. the house. See here:https://t.co/Zo1pfZBeT8 pic.twitter.com/hK3QjnIDuH
There was still some confusion voiced Monday around what the Colorado regulator is proposing, although the latest rule update does add clarity.
“Is this language intended to authorize fantasy contests that are played against the operator in certain conditions?” asked Andrew Winchell, director of government affairs at FanDuel, during Monday’s hearing. “Or is it a ban on all fantasy contests played against the operator?”
FanDuel has suggested fantasy contests played against the house should be banned in Colorado. That opinion, however, is not unanimous, and operators such as PrizePicks and Underdog are pushing back.
Lawyer Josh Kirschner, appearing on behalf of PrizePicks, said the rules proposed by Colorado regulators are “incompatible” with state law.
“What's more, I would lament, candidly, this division going from one of the most progressive in the nation in terms of what it allowed and recognized as fantasy sports to one of the most restrictive regimes in the nation who have now codified a version of fantasy sports that seems to stop recognition at and around 2016,” Kirschner said during Monday’s hearing.
Kirschner also asked what sort of “due process” current licensees would get if and when the proposed rules take effect, such as if companies could keep offering contests until their permits expire.
The house doesn't always win
The public can comment on the proposed rules until Friday, Nov. 3. It’s not until after then that the rules take effect.
At any rate, the proposed regulations are another attempt by a state to rein in pick’em providers, who offer their popular product where there is and is not legal sports betting. Pick’em providers allege the recent crackdown is driven by DraftKings and FanDuel, whose chief executives claim they want states to sort out the mess.
OwnersBox, another fantasy operator, said in its written submission to the Colorado Division of Gaming that it is important to note not all house-based contests are the same.
"It is crucial to distinguish between those house-based contests that genuinely promote skill, knowledge, and participant interaction, as opposed to those that primarily involve chance or replicate traditional gambling activities," OwnersBox president and CEO Brian Kipp wrote to the Colorado regulators. "Categorically excluding all house-based contests may unfairly limit innovative, skill-based variations that can offer unique and engaging experiences while staying within the bounds of the Fantasy Contests Act."
