Questions Swirl Around Fantasy Sports

by | Jan 5, 2024

In Florida, a dispute is intensifying over fantasy sports betting, with state regulators issuing cease-and-desist letters to certain operators, while larger companies like DraftKings and FanDuel remain unaffected, against the backdrop of the Seminole Tribe’s foray into online sports betting.

As the Seminole Tribe offers online sports betting in Florida, a dispute over fantasy sports is heating up amid efforts by gambling regulators to rein in companies accused of operating potentially illegal betting games.

The Florida Gaming Control Commission in September sent cease-and-desist letters to three fantasy sports operators, threatening legal action if the sites didn’t immediately stop.

But Sen. Joe Gruters, R-Sarasota, wants the commission to explain why the businesses were targeted and to clarify why they could be breaking the law while the biggest players in the industry — DraftKings and FanDuel — aren’t. The senator raised the issues in a Dec. 18 letter to the commission’s executive director, Lou Trombetta.

Gruters pointed to the cease-and-desist letters Trombetta sent to Underdog Sports, LLC; SidePrize LLC, also known as Performance Predictions LLC, doing business as PrizePicks; and Betr Holdings, Inc.

Gruters’ letter asked why “the two largest fantasy sports operators” in Florida did not receive similar threats from the commission.

“The letters definitively state that ‘betting or wagering on the result of contests of skill … including fantasy sports betting, is strictly prohibited and constitutes a felony offense.’ Notably, however, the commission’s public position is less definitive. In the FAQs (frequently asked questions) on the commission’s website, the commission states that ‘wagering on fantasy sports’ is ‘probably not’ legal. I am concerned that the commission is applying an interpretation that is not supported by law and that the commission may be selectively enforcing its interpretation,” Gruters wrote.

Gruters told The News Service of Florida that he spoke with Trombetta about the situation and asked why DraftKings and FanDuel weren’t targeted.

“I guess the biggest guys have not been issued those letters. And so, for me, it’s just a matter of fairness. I think it should be across the board. I talked to the executive director about that, personally. He was in my office. And I think he said letters were forthcoming, but I don’t think those have gone out yet,” Gruters said in a phone interview Wednesday.

Gruters said that he understood letters would be sent to DraftKings and FanDuel.

The gaming commission is “in the process of responding to Sen. Gruters’ letter,” Eric Carr, the commission’s director of external affairs, told the News Service this week.

Months after receiving the cease-and-desist letters, the three daily fantasy sports operators appear to be continuing to offer games on their apps and websites in Florida.

The questions about the fantasy sports companies have come in advance of the 2024 legislative session, which will start Tuesday.

The three companies targeted by the gaming commission have hired a slate of lobbyists, including some of Florida’s most-prominent lobbyists such as Nick Iarossi and Ron Book.

Gruters said he offered to file legislation to clear up the issue but was told that the commission was still “processing all the information.” Florida has laws regulating gambling activities, but does not have a law specifically addressing fantasy sports.

The dispute over fantasy sports also comes as the Seminole Tribe has moved forward with online sports betting.

A 30-year agreement, signed by Gov. Ron DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr. and ratified by state lawmakers in 2021, gave the tribe “exclusivity” over sports betting — including mobile sports betting — throughout the state. Under the deal, wagers could be placed anywhere in the state using mobile devices, with the bets being processed on tribal lands. In exchange, the tribe agreed to pay the state at least $2.5 billion over the first five years of the agreement, known as a compact. The deal also allowed the tribe to contract with the state’s pari-mutuel operators to offer sports betting and gave the Seminoles permission to add craps and roulette at their casinos.

The agreement included an exception allowing for the operation of “fantasy sports contests.”

But the fantasy games targeted by gambling regulators could violate the compact, according to Jim Allen, who heads the Seminoles’ gambling operations and was instrumental in negotiating the deal.

Allen, the chairman of Hard Rock International and the CEO of Seminole Gaming, told the News Service that the types of games operated by the three fantasy companies aren’t allowed under the compact — or state law.

“We made it very clear that we do not have an issue with fantasy sports, specifically with what DraftKings and FanDuel are offering. With that said, when we get to Underdog, when we get to BetR and others like that, there is no doubt, not just in Jim Allen’s opinion, it’s not just the Florida state gaming (commission) opinion, it’s not just in the attorney general’s opinion, but 11 other states … have flat out said what they are doing is gambling, they’re taking live bets, and it’s illegal. And, yes, unequivocally it violates the compact,” Allen said in a phone interview last month.

The tribe on Nov. 7 began accepting mobile sports bets from a limited number of gamblers and went statewide in early December.

The fantasy operators targeted by regulators, however, say their activities are legitimate.

“Our very popular fantasy sports platforms continue to operate legally in Florida, and we are certainly not in violation of the compact,” Allison Harris, a spokesperson for a group called the Coalition for Fantasy Sports, told the News Service, when asked to respond to Allen’s comments.

Florida isn’t the only state targeting the companies, which offer games known as “pick ‘em style” fantasy contests or “over/under player prop pick ‘em” games. Single fantasy players can choose from a set of athletes who are assigned certain outcomes for different activities, such as a set number of yards or points scored. Players choose whether the athletes will score over or under the specified outcomes.

DraftKings and FanDuel, meanwhile, offer games in which multiple fantasy players compete against each other by building rosters of teams composed of athletes. Players earn points based on the athletes’ performance.

A legal analysis provided to the Florida Gaming Control Commission by Joe Jacquot, a former general counsel for DeSantis who has worked for DraftKings and FanDuel, contended that the three targeted operators are breaking state law, which allows games of “skill” but prohibits games of “chance,” unless authorized.

“FanDuel, as a contest sponsor, merely puts up a purse, for which it does not compete. The companies that received cease and desist letters do the opposite — they participate in the contest and win the prize if the contestant does not correctly guess winning propositions. Indeed, they say it does not matter under federal law that the contest involves the operator, but Florida law makes that very distinction,” Jacquot wrote in the document obtained by the News Service.


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