PrizePicks will be suspending its operations in New York State. Just recently, the popular fantasy sports contest platform agreed to a settlement with the New York State Gaming Commission and pay almost US$15 million in penalty, due to operating in the state without authorization. Data from the regulator shows that the company did not file for an application by the January 16 deadline.
Until now, PrizePicks offered daily fantasy sports and pick’ em games, which are similar to betting options such as parlays on licensed mobile sports betting sites in the state. Hence, exposing a loophole in state law. After the controversy, lawmakers in the state are looking to submit legislation to close the apparent loophole which allowed pick’ em contests to emerge.
PrizePicks Settles with New York Regulator
CEO of the fantasy operator, Adax Wexler, and Robert Williams, Executive Director of NYSGC inked the settlement agreement last week. However, even after the news of the agreement, the company continued to run contests, such as pick’em bets in the state via its mobile app. The operator was on schedule to cease business in the Empire State on Wednesday.
In October 2023, the gambling regulator introduced new protocols for paid fantasy sports similar to prop betting. The rules read that contests should not be based on proposition betting or contests that imply mimicking proposition wagering and that contests in which a participant must choose, directly or indirectly, whether an individual athlete or a single team will exceed an identified statistical achievement, are banned.
State Sen. Joe Addabbo recently shared lawmakers are seeking ways to close the loophole in state law. He hopes that the elimination of such pick’ em games can be dealt with quickly with an administrative policy change by NYSGC, instead of taking months. He added that if administrative action is not on the cards, then talks will continue and a new legislation may be needed.
PrizePicks’ agreement with the commission features a stipulation that the operator was not permitted to offer ‘purported’ fantasy games. Also, the arrangement did not provide an evaluation of whether the company’s contests were in compliance with fantasy sports contest requirements, or whether they were considered as unregulated mobile sports betting offerings.
Meanwhile, the company is cooperating with the commission for a permit for Arena, a peer-to-peer platform which offers fantasy sports contests. The operator will still operate free-to-play games until it receives a new permit from the state. It also informed customers that paid contests will be put on hold due to recent updates in the licensing rules in the state.
Betting Popularity Worries Experts
However, the popularity of traditional sports betting and fantasy contests has turned into a cause of concern for gambling experts. Jeffrey Wierzbicki, with the Western Problem Gambling Resource Center, shared that more people have sought help after the introduction of New York’s mobile sports betting market and many of those calls for help come from younger individuals.
Source: Burke, Molly “PrizePicks to pay $15M settlement, cease operations” Times Union, February 13, 2024
