As Floridians await the outcome of the sports betting legal battle, they might have one fewer sports wagering option. That’s because Florida gaming regulators have targeted props-style daily fantasy sports (DFS). The Florida Gaming Control Commission (FGCC) sent cease-and-desist letters to several operators on Sept. 19, including Underdog Fantasy, PrizePicks, and Betr Picks.
In the letters, FGCC Executive Director Louis Trombetta told operators that “betting or wagering on the result of contests of skill” is prohibited under Florida law. According to the letter, contests of skill include sports betting and fantasy sports.
Additionally, Trombetta ordered:
I am hereby demanding you immediately cease and desist offering or accepting bets or wagers from residents of this state on the results of any contests of skill such as sports betting, including, but not limited to, bets or wagers made in connection with fantasy sports.
DFS Operators Answer Florida Gaming Regulators
As expected, DFS operators disagreed with the decision. Underdog founder and Co-CEO Jeremy Levine wrote that the company “strongly disagrees” with the FGCC assessment and will continue to operate. He implied that a legal battle is possible.
Meanwhile, a PrizePicks spokesperson said there will be no changes in the company’s operations. The spokesperson added that PrizePicks representatives are “eager” to meet with FGCC and discuss their business model.
While the letter by FGCC labels all DFS as illegal, the country’s biggest operators, DraftKings and FanDuel, did not receive cease-and-desist letters. The omission of DraftKings and FanDuel implies that the Florida regulator is after props-style DFS.
Also called “pick ‘em,” DFS prop bets differ from traditional fantasy sports. Users choose two or more players and bet under or over on a specific statistic (e.g., whether a quarterback will throw under or over 200 yards).
Underdog and PrizePicks’ refusal to change operations could mean another legal battle in Florida. The state’s laws are ambiguous regarding fantasy sports, as they neither specifically permit nor prohibit DFS.
Props-Style DFS Is a Way to Enter Largest States
The ambiguity around DFS prop bets has allowed operators like Underdog and PrizePicks to operate in the biggest states in the nation: California, Texas, and Florida. They account for almost 100 million people with no legal gambling options besides horse racing, tribal casinos, and cardrooms.
Aside from those populous jurisdictions, props-style DFS is available in over 30 states, many of which also have no legal sports betting options. That’s why more companies are starting to offer pick ‘em bets. That could soon include large operators like DraftKings.
Recently, a discovery about a trademark filing revealed that DraftKings (DraftKings 38,30 -1,16%) could also look at props-style DFS. On May 11, the operator filed for a “DraftKings Cashpicks” trademark. The filing notes section describes the product as “entertainment services in the nature of sports competitions” and “sports betting.” If so, Cashpicks could be a way for the operator to enter the country’s biggest states.
Whether DraftKings wants to launch its product and challenge PrizePicks and Underdog is still unknown. The filing could be a precautionary measure. Multiple states are looking into the legal status of props-style DFS, and DraftKings could be preparing for either outcome.
Last year, Underdog and PrizePicks pulled out of Maryland after a similar scenario to Florida’s. Last month, a Michigan regulator proposed to lawmakers to ban pick ‘em bets. A case in California and a regulator proposal in New York also threaten the legal status of DFS prop bets. Other states like Ohio, Wyoming, and Illinois are also investigating the matter.
C&D May Be Tied to Florida Sports Betting Saga
In his letter to operators, Trombetta mentions that in Florida, sports betting could “be lawfully conducted only pursuant to a gaming compact.” That is the route the state wanted to take for sports betting. In 2021, Gov. Ron DeSantis signed a gaming compact with the Seminole Tribe, giving the tribe and its Hard Rock Bet exclusivity over sports betting in Florida.
However, the sportsbook only operated briefly before the compact was legally challenged. Casino and poker room operators West Flagler Associates and Bonita-Fort Myers Corp. sued Secretary of the Interior Deb Haaland for allowing a gaming compact on non-tribal lands.
In late 2021, a federal judge agreed with the plaintiffs. But in recent months, there have been updates in the case. In June, the DC Circuit Court of Appeals reversed the decision. As a response, West Flagler asked for an en banc rehearing but was denied. The Seminoles told players to expect sports betting to resume in early October. However, West Flagler didn’t give up and filed a “motion to stay mandate,” meaning a possible launch could take longer.
Tying back to DFS, the cease-and-desist letters could be a step by the state to protect the gaming compact in anticipation of re-launching sports betting. That is if the case doesn’t go to the US Supreme Court.