The compromise struck in Colorado allowing one prominent fantasy operator to offer its pick 'em games in the state is intended to increase the skill required to play and further distinguishes it from legal sports betting, according to regulators.
Underdog Fantasy announced earlier this month that it launched its pick 'em games in Colorado, something it hasn't done in several other states with retail and online sports betting sites.
Regulators in some of those states have taken issue with fantasy games that look a little too much like sports betting, but Colorado sports betting regulators say the conditions they put on Underdog's pick 'em games have made them acceptable.
A very particular set of skills
Those tweaks (first reported by Legal Sports Report) include requiring players to select at least four athletes, rather than two in other states, and relying on fantasy points, rather than the literal statistics of a sport, for the lines.
A spokesperson for the Colorado Department of Revenue (DOR) told Covers that Underdog had already been doing business in the state under a “small fantasy contest operator registration” since September 2020.
Earlier this month, it was approved for a full fantasy contest operator license and agreed to abide by the added restrictions the DOR imposed, which aim to differentiate fantasy from straight-up sports betting.
“One requirement to be a fantasy contest in Colorado is that ‘all winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of athletes in sporting events,’” DOR Director of Communications Daniel Carr said in an email. “By requiring a minimum of four athletes instead of two the Division is increasing the skill required by the patrons and ensuring this requirement is met.”
Following guidelines
Colorado’s rationale for requiring Underdog to use fantasy points, rather than real-game statistics, followed similar logic.
“The Division has interpreted ‘accumulated statistical results’ to be the accumulation of fantasy points based on multiple statistics of an athlete's performance,” Carr said. “This again increases the skill involved and also distinguishes fantasy contests from sports betting.”
When it comes to how those stats are collected and added up, that falls to the fantasy operator, according to the regulator.
“The Division just sets the guidelines to be followed,” Carr said. “The scoring data and variations of contests are left to each individual fantasy contest operator to create.”
Anyone else?
Colorado’s tweaks to Underdog’s pick ‘em games could be mirrored by other states with legal sports betting. Indeed, Underdog’s founder and co-CEO viewed the Colorado launch as a vote of confidence in the coexistence of fantasy pick ‘em games and legal sports betting in states with both, even as it’s been a non-starter jurisdictions such as Ohio.
“It's a common misconception that Pick'em fantasy has no place in states with sports betting,” Underdog CEO and co-founder Jeremy Levine wrote on LinkedIn. “Our growth in states with both clearly shows otherwise. We're excited to work with regulators to keep on expanding that list.”
Levine has argued Underdog’s offerings are legal and that the company is under attack by business rivals such as DraftKings and FanDuel. The CEO pointed to three core characteristics that help legally define a fantasy contest as such: that the game is based on skill, uses predictions on two or more athletes from different teams, and that the outcomes are based on the states those athletes accumulate in real-world games.
“Every single one of our contests meets that simple definition,” Levine wrote. “Fantasy sports is not limited to only FanDuel and DraftKings' salary cap contests. The laws they wrote say fantasy sports is far broader than just salary cap.”
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