PrizePicks to Cease Paid Contests in New York after $15M Settlement

PrizePicks, a leading daily fantasy sports operator, has agreed to a settlement with the New York State Gaming Commission (NYSGC), consenting to halt its for-money contests in the state and pay a substantial settlement of nearly $15 million. The sum reflects the revenue generated by PrizePicks through purported interactive fantasy sports contests from 4 June 2019 through 19 December 2023, including penalties.

PrizePicks Aims to Obtain a License and Resume Operations

In October, New York clarified its regulations on fantasy sports, disallowing contests based on proposition betting or those that mimic proposition betting. This ban significantly impacts daily fantasy operators such as PrizePicks, Underdog, and Sleeper, as the state ruled that their products were too similar to traditional sports wagering and required an equivalent license.

According to an ESPN investigation, PrizePicks allegedly operated outside New York law for several years. The operator clarified that it had conducted its business in the state in good faith, believing it could do so. The settlement doesn’t disqualify PrizePicks from obtaining a new license, and the company intends to pursue a license to offer its peer-to-peer product in New York.

As safer, skill-based DFS contests like ours rise in popularity, we will work constructively with policymakers on thoughtful legislation that allows New Yorkers to play the contests they love.

PrizePicks statement

PrizePicks noted it was pleased to have reached an agreement with the Gaming Commission and looked forward to cooperating with them. The operator reiterated its unwavering focus on ensuring strong consumer safeguards, adding that its contests could generate significant tax revenue for New York. PrizePicks hopes to obtain the required license soon and resume its paid contests.

DFS Operators Face Increasing Pressures

This settlement comes amid changes in the gaming law in New York, prompting PrizePicks to temporarily cease its paid contests in the state, effective Thursday. This unfavorable development coincides with the ongoing campaign from high-profile sportsbook operators against the fantasy sports sector as they insist that DFS operators must abide by the same rules as wagering on traditional sports.

Some critics argue that there is no tangible evidence that DFS products are harmful, noting that market leaders may be using the pretense of regulatory compliance to preserve their market dominance and stifle competition. However, fantasy sports cannot exist in a legal grey area forever, so more US jurisdictions will likely attempt to regulate this segment.

PrizePicks operates real-money contests in 30 states and the District of Columbia, and the settlement signifies a significant development in the evolving landscape of daily fantasy sports regulations. Other DFS operators must take note of this case and adapt their strategies, ensuring they remain compliant with regulations while remaining competitive with traditional sportsbooks.