One of the many unanticipated battles taking place in the regulated US sports betting market is the role that Daily Fantasy Sports (DFS) sites play and how they should be licensed. Across the country, lawmakers are grappling with how to regulate DFS operators whose offerings get a little too close to actual sports betting. That’s the context that set up Underdog Fantasy Sport’s exit from the New York market earlier this week.
According to a report published in Legal Sports Report Underdog, which was operating under a license originally obtained by Synkt Games, reached an agreement with the New York State Gaming Commission (NYSGC) to pay a fine and exit the market for operating outside the terms of the original license.
The State of New York, which refers to DFS as Interactive Fantasy Sports (IFS), first issued a license to Synkt back in 2016. Since then, the NYSGC hasn’t issued any IFS licenses. Underdog, which had been operating without a license at all in New York since 2020, acquired Synkt and its license in 2022. Though Underdog was licensed to offer the games in New York, the NYSGC says its products were a lot more like actual sports betting than DFS (or IFS) and were not within the terms of their license.
Underdog has agreed to pay an $18 million fine and exit the market. Underdog’s General Counsel Nicholas Green painted the situation in the best possible terms saying, “For nearly a decade, fantasy sports in New York has operated in regulatory uncertainty, including licensing delays limiting consumers’ choices to only a couple of legacy operators. We disagree with the Commission, but the settlement does provide clarity on New York licensing issues. The settlement recognizes that Underdog worked in cooperation with the Commission and operated at all times in a good faith interpretation of state law. We look forward to offering all of our contests again to New Yorkers, and we are working with the Commission to do so as soon as possible.”