A recently uncovered trademark filing by DraftKings is generating speculation about whether the operator is preparing to launch props-style daily fantasy sports (DFS). DFS prop bets allow users to bet on a player’s performance and combine multiple players for higher payouts.
A filling at the United States Patent and Trademark Office from May 11 shows that DraftKings applied to trademark “DraftKings Cashpicks.” (DraftKings user and Microsoft employee Mike Dzikowski first called attention to the filing on X – formerly Twitter).
The filling suggests that Cashpicks is an extension of DraftKings’ DFS offerings. In the category “Goods and Services,” it says:
Downloadable mobile applications for use in fantasy sports competitions, namely, mobile applications for managing and participating in fantasy sports competitions
Additional language includes “entertainment services in the nature of fantasy sports competitions” and “entertainment services in the nature of sports betting.” That implies that the product will resemble sports betting, perhaps like DFS prop bets.
The name DraftKings is attempting to trademark is similarly interesting in its resemblance to that of PrizePicks. DraftKings has pushed back against PrizePicks and similar companies like Underdog Fantasy, which offer parlay-style player-against-the-house propositions they claim are a form of DFS. DraftKings has described those rivals as illegal sportsbooks.
It’s not clear if DraftKings has filed the trademark as a precautionary measure or if it plans on entering the fray with a similar product of its own. Multiple states are examining the legality of these types of bets, and DraftKings may want to have contingency plans in place for all possible outcomes.
DraftKings Has Long Opposed Props-Style DFS
The two largest sportsbooks by market share, FanDuel and DraftKings, started as DFS sites before sports betting legalization in 2018. But while they fought hard for the legal status of DFS in the past, now they strongly oppose props-style DFS. During this year’s National Council of Legislators from Gaming States 2023 Summer Meeting, FanDuel Head of State Government Relations Cesar Fernandez said:
There are companies today posing as fantasy-sports operators, and they are running illegal sportsbooks.
FanDuel and DraftKings view DFS operators as illegal sportsbooks mainly because of regulations and taxes. After the legalization of sports betting, the operators spent millions in licensing and market-access fees. They also pay up to 51% in taxes in each state they operate in. FanDuel and DraftKings believe that companies like PrizePicks go around taxation and licensing costs.
Meanwhile, DFS operators think DraftKings and FanDuel are scared of the competition and want to hold a monopoly. Underdog founder and Co-CEO Jeremy Levine recently wrote an open letter in which he said the two operators are using their lobbying power to paint Underdog and other similar operators as illegal. Levine argues that DFS prop bets are skill-based games and not gambling.
If You Can’t Beat Them, Join Them?
Filing for a trademark could mean that DraftKings is looking into potentially entering a big opportunity market. Offering DFS prop bets means that the operator can possibly enter the country’s largest states – California, Texas, and Florida, without fighting with native tribes or lawmakers.
PrizePicks and Underdog Fantasy offer DFS prop bets in over 30 states, many of which don’t have legal sportsbooks. That means that DraftKings’ reach could extend to those states. If it follows that strategy, DraftKings could force competition out, as it has substantially larger financial power.
DraftKings Cashpicks could also be a way for the company to become a leader in the skill-based game market. Skill games are unregulated and could be a significant piece of the gambling scene in the US. DraftKings has already invested in skill games through its multi-stage venture capital firm, Drive by DraftKings. If it’s looking into skill games, Cashpicks could solidify DraftKings’ position.
CA, NY Could Decide Future of DFS Prop Bets
Whether DraftKings is looking to launch props-style DFS or not is unknown. However, lawsuits and state regulators could determine the future of these types of bets.
The Michigan Gaming Control Board already proposed that lawmakers ban these types of bets. Ohio, Wyoming, and Maine regulators are also looking into props-style DFS. Meanwhile, the Alabama Attorney General’s Office asked PrizePicks and Underdog Fantasy to revise the bets offered.
But resolutions in two states, California and New York, could largely influence the future of DFS prop bets. In an update to the public register on Aug. 2, the New York State Gaming Commission decided that these bets “mimic proposition betting.” The regulator rejected a commenter’s request to change the law and allow props-style DFS.
New York regulations allow the public to comment and for an agency to accept comments for at least 60 days after an update. That means DFS operators like PrizePicks have until Oct. 3 to comment. If they fail to do so, the state will update the law and ban the bets. It’s possible that DraftKings is waiting on New York’s decision before it decides whether to launch Cashpicks.
The outcome of a case in California could also be crucial. Social sportsbook Fliff is facing a class-action lawsuit that accuses the operator of being an illegal sportsbook. Fliff argues that users have agreed to the terms and conditions, and California law doesn’t apply. Fliff also claims it uses a sweepstakes model.
However, plaintiff Bishoy Nessim argues the terms and conditions do not apply to California law. If the court sides with the plaintiff, it could imply that DFS prop bets are illegal. Losing access to California and New York could be a major financial blow to DFS operators.