The chief executives of two of the largest sports betting sites in the U.S. say it is up to states to determine what is a fantasy contest and what is wagering — arguing that when they do, regulators should enforce the definition equally.
Lawmakers, regulators, and companies have spent the past few months locked in a debate about pick ‘em fantasy contests, wherein users choose two or more outcomes, such as a player going over a certain point total, to try to win a payout from the operator.
Some legal sports betting regulators have started to crack down on pick ‘ems, but several fantasy companies argue they are operating within the rules and allege the pushback is fuelled by DraftKings and FanDuel, the two biggest DFS and online wagering operators in the U.S.
FanDuel CEO Amy Howe and DraftKings CEO Jason Robins were both on a panel at the Global Gaming Expo (G2E) on Wednesday, and both said it falls to the states to decide what to do, albeit perhaps with a few lobbyists enquiring about what that may be.
“There's a legal and regulatory framework and I think it's up to the states to adjudicate this,” Howe said. “I think they will decide whether those offerings are within the legal framework. And there's a clear distinction between games of skill and games of luck.”
Clearing things up
When CNBC’s Contessa Brewer, the panel’s moderator, said the legal sports betting giants were lobbying state regulators to take action, DraftKings’ Robins replied that they are more trying to understand “the constraints” on what they can offer.
“I think that's part of where we are right now in the states,” Robins said. “There's going to be people, companies that are pushing the limits.”
Robins then said it comes back to competition and suggested that DraftKings wants to compete on equal footing by offering the same product and with everyone subject to the same rules.
“On these things, I think it's up to the states to decide,” Robins said. “What we're seeking is, ‘Hey, what can we do? What can’t we do?’ And, in a perfect world, we'd like to be able to offer the same thing that anybody else can, and if we can then great. That's what maximizes competition and that's what creates the best environment for consumers.”
Regulate it... or don't
The comments come after regulators in states such as Ohio and Florida have already begun taking action to scuttle prop parlay-style pick ‘ems within their borders. The Florida Gaming Control Commission, for instance, sent cease-and-desist letters to three fantasy operators. DraftKings, however, did not receive one of those letters, Robins noted.
At issue is whether pick ‘ems constitute illegal or unlicensed sports betting. The player prop parlay-like products are offered in states that have not legalized sports betting and that have, meaning those fantasy operators can compete with DraftKings and FanDuel where the two companies are licensed sportsbook operators and where they are not.
That appears to be grating on the online sports betting giants. Robins said that if a product is legal in a state, companies should generally be able to apply for a license to offer that game.
“And if it's illegal, then they shouldn't be offered, and there should be some sort of enforcement taken,” he added. “If you want to regulate something, regulate it. If you don't, don't, but I don't think that having inconsistent rules for different companies is in the best interest of the consumer or competition.”
Who do you want to go to the Super Bowl this year?
— Geoff Zochodne (@GeoffZochodne) October 11, 2023
Howe: Bills
Robins: I'm going
Robins and Howe also floated concerns about unregulated products offered in a market that could lack consumer protections or know-your-customer (KYC) systems to guard against money laundering and other illicit activity.
“That to me is one of the real issues here,” Howe said. “Where the lines start to blur between games of skill and real money wagering and you don't have the same KYC protections that we have.”
On that front, some pick 'em operators are trying to demonstrate their responsible gaming credentials. Underdog, for example, announced earlier this week the launch of an RG investment initiative it seeded with $1 million called GuardDog.
"With GuardDog, we intend to spur innovation to help companies that help people play the games they love — including all our games on Underdog — responsibly,” Underdog Founder Jeremy Levine said in a press release. “We know there are tons of dreamers, entrepreneurs and builders out there that can help build a stronger, more responsible ecosystem for all."
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