Massachusetts Gaming Commission Reviewing Daily Fantasy Sports Operations

• As daily fantasy sports operations come under scrutiny, the Massachusetts Gaming Commission will evaluate DFS in the commonwealth
• MGC Interim Executive Director Todd Grossman today said a review of daily fantasy sports will take place in the state
• Grossman said the MGC will look to ensure that DFS is not overlapping into sports betting territory

The Massachusetts Gaming Commission will evaluate daily fantasy sports (DFS) offerings in the commonwealth as DFS operators are recently experiencing increased scrutiny for their offerings nationwide.

Massachusetts Gaming Commission Interim Executive Director Todd Grossman today revealed the commission would begin a review of DFS operator and offerings in the state in light of several public examinations across the country.

“There’s been a great deal of activity surrounding the boundaries of sports wagering and daily fantasy sports and whether there’s some overlap between the two. That is to say, whether there are certain activities offered by DFS operators that may be considered sports wagering activity. That’s been addressed in a number of jurisdictions now and has been discussed publicly. I wanted to note we are certainly aware of this issue and we’re in the process of reviewing it,” Grossman said.

DFS Under Increased Scrutiny Nationwide

Grossman did not provide any details on what the evaluation would entail or any timelines on when it would be completed.

Ahead of Massachusetts, several states have initiated examinations of DFS operations as regulators have started to criticize DFS operators for offering markets that are similar to sports betting. DFS sites are typically beholden to lower tax rates than sports betting operators and several states have taken action against offerings they consider as “illegal sports betting.”

DraftKings, FanDuel, PrizePicks, and Underdog Sports are licensed for DFS in Massachusetts. PrizePicks and Underdog Sports have both recently received national attention for their offerings and their alleged similarity to sports betting. Both DFS operators have claimed their parlay-style, over-under type betting markets fall under the Unlawful Internet Gambling Enforcement Act (UIGEA) carveout for games of skill.

PrizePicks and Underdog Sports both offer these specific types of player-prop type parlays against the house, not against other individuals like more traditional DFS operators.

Wyoming regulators recently sent both PrizePicks and Underdog Sports a cease-and-desist letter for what they determined to be “sports wagering” advertised as daily fantasy sports. Maine also sent a letter to Underdog Sports regarding a “possible” violation for offering unlicensed sports betting in the state.

Also, in recent New York State Register update, New York regulators rejected a request from a commenter to alter the state’s proposed DFS rules to allow for such contests offered by PrizePicks and Underdog Sports.

“A commenter objected to proposed Rule 5602.1(a)(4), which would make explicit that contests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting. The Commission believes that a contest offering that is essentially sports betting, which is authorized for licensees and regulated pursuant to Racing Law Article 13 (not Article 14), cannot properly be characterized as IFS simply because an operator labels it as such.”

Alabama Asks For DFS Adjustment

Most recently,  Underdog Sports and PrizePicks altered their offerings to Alabama customers due to a recent request from the Alabama Attorney General’s Office. PrizePicks and Underdog Sports will no longer offer their over/under type selections with individual athletes to customers in the state. Both Underdog and PrizePicks are limited to offering Alabama customers their “combo” selections, which must include two or more athletes.

Customers in Alabama select between two to six of these “combo” boxes and play against the house, not other individuals like more traditional DFS operators.

“We are appreciative to the officials at the Alabama Attorney General’s Office who have been incredibly collaborative in ensuring that fantasy enthusiasts in the state of Alabama can access our popular skills-based fantasy contests. We now have an updated product offering in Alabama that has become extremely popular over the past month and look forward to innovating additional entertaining game types in the future,” the PrizePicks representative said.

A spokesperson for the Alabama Attorney General’s Office declined to comment on the issue. The Alabama Attorney General’s Office regulates DFS in the state.

Nicholas Green, general counsel for Underdog Sports, thanked the Attorney General for working with Underdog Sports to make the adjustments and for allowing both peer-to-peer and pick’em single-player fantasy contests in the state.

“We were glad to work with the Alabama Attorney General, who decisively interpreted the state’s daily fantasy sports law as allowing both peer-to-peer and our pick’em single-player fantasy contests. We’ve always maintained a fantasy sports license in the state, which the state has renewed multiple times. We’re continuing to offer pick’em with the Attorney General’s approval, with only relatively minor adjustments. We look forward to continuing to make our pick’em game and future game formats available to Alabamans,” he told SBD.

Currently, users in Alabama can no longer include squares with individual athletes in their selections. Customers must use the combo squares.