Virginia is the latest state to have lawmakers make decisions regarding daily fantasy sports.
The Virginia Office of the Attorney General has responded to an inquiry regarding the classification of online fantasy sports contests. The inquiry, brought on by Republican House of Delegates member Wren Williams, regards whether fantasy contests are considered wagering.
Virginia Attorney General Jason Miyares has determined that fantasy contests are considered gambling as defined by state code. His reasoning is based on fantasy contests requiring customers to wager on an athlete’s statistics despite customers competing against one another.
The decision could impact Virginia fantasy operators, including PrizePicks and Underdog Fantasy, more than Virginians as wagering has been regulated in the state since 2021. Fantasy operators may be forced to change their business practices in the state while sportsbooks will continue to operate and generate revenue.
Virginia, which is home to 16 sportsbooks, reported a $571.3 million total sports betting handle for October 2023 — an 8.2% increase year-over-year. The state posted $56.3 million in adjusted gross revenue from sports wagering for the month with 97.5% of the proceeds allocated toward the state’s General Fund. The remaining 2.5% goes into a state Problem Gaming Support Fund.
Take a hit
Nationwide decisions on fantasy contests have come at a cost for operators.
In October, the Maine Gambling Control Unit handed Underdog a $391,850 fine following a lengthy investigation that determined the operator offered pick’em contests that mirrored sports betting. The fine, which also included an order for Underdog to stop offering the contests to Maine customers, was based on $50 for each of the 7,837 Underdog customers since 2021.
Earlier this year, Florida and Ohio gaming regulators also took similar stances regarding fantasy sports with both states ordering pick’em style fantasy operators to temporarily ban contests.
Still lucrative
Fantasy sports have received recent backlash but the market is expected to grow.
The U.S. fantasy sports market is projected to be valued at approximately $6.87 billion by 2028 — up from $3.4 billion in 2022, according to ResearchandMarkets.com. Fantasy sports, which have FanDuel and DraftKings as market leaders, are expected to benefit from an increase in popularity amongst Gen Z and millennials. Partnerships are also expected to have an impact.
