A popular daily fantasy sports operator settled with New York regulators but is no longer offering its games in the Empire State.
Underdog Fantasy and the New York Gaming Commission released statements on Friday outlining an agreement that will result in the DFS site paying a $17.5-million fine and withdrawing drafts and pick’em games from the market. The regulatory body alleged that Underdog was offering DFS contests through its temporarily permitted subsidiary Synkt that aren’t permitted under New York law.
“It’s a unique, temporary license issue specific only to New York, and not related to any specific game format we offer,” Underdog’s general counsel Nicholas Green said. “Any fantasy game created after 2015, no matter the format, is not permitted under the commission’s interpretation of what games a temporary permitholder, like Underdog, can and cannot offer.”
Regulators said Underdog operated in good faith, and the operator’s departure from New York could be temporary if they can receive a permanent license from the commission.
“This settlement is another example of the Gaming Commission looking out for the gaming public,” commission chair Brian O’Dwyer said. “We encourage fantasy sports players to play only through permitted or registered operators that are subject to our comprehensive regulations that protect New Yorkers.”
Blurred lines
The DFS operator challenged the gaming regulator’s “interpretation of the law.” Still, Underdog agreed to pay the revenue it generated in New York.
Founded in 2020, Underdog is one of several DFS operators facing legal issues in some U.S. states. Opponents of DFS sites argue that they blur the lines between sports betting and fantasy games, which are considered more skill-based in some jurisdictions.
“For nearly a decade, fantasy sports in New York has operated in regulatory uncertainty, including licensing delays limiting consumers’ choices to only a couple of legacy operators,” Green said. “We disagree with the Commission, but the settlement does provide clarity on New York licensing issues. The settlement recognizes that Underdog worked in cooperation with the Commission and operated at all times in a good faith interpretation of state law. We look forward to offering all of our contests again to New Yorkers, and we are working with the Commission to do so as soon as possible.”
Underdog competitor PrizePicks also ran into legal issues with the New York Gaming Commission and exited the market in February 2024 after paying a $15 million fine. There are currently 11 licensed “interactive fantasy sports” sites operating in the Empire State, including DraftKings, FanDuel, Yahoo, RealTime Fantasy Sports, and Splash Sports.
New markets
On the same day Underdog announced its withdrawal from New York, it announced regulatory approval to operate its Pick’em Champions game in New Jersey and Delaware.
Those contests are peer-to-peer games in which participants create a roster of two to eight athletes and whether they go higher or lower on their offered statistics.
“New Jersey and Delaware have been at the forefront of modern sports gaming regulation, and bringing our Pick‘em Champions game to those states is yet another endorsement from highly respected regulatory bodies of the product we built, which much of the industry has now replicated,” Green said.
Underdog’s DFS offerings now extend to 36 states, and the company also operates a traditional sportsbook in North Carolina.
