Welcome to FTW Explains, a guide to catching up on and better understanding stuff going on in the world. PrizePicks users in New York were in for a rude awakening Tuesday when it was reported the daily fantasy sports operator was ceasing its operations in the state. FTW is here to help them and everyone else understand why it’s happening.
PrizePicks is putting a pause to its for-money contests in New York, effective Wednesday, as first reported by ESPN. The decision comes as part of an agreement with the New York State Gaming Commission (NYSGC) which also requires PrizePicks to pay a settlement amount of almost $15 million.
According to a Stipulation of Settlement document, PrizePicks had been offering purported interactive fantasy sports (IFS) in New York since June 2019 without authorization to do so.
Here are a few things to know:
PrizePicks was in violation of state law
The issue is simple. PrizePicks was offering what it purported to be interactive fantasy sports, as defined by state laws, without the proper permit necessary in New York.
PrizePicks said it operated in a good-faith belief that it had the ability to do, but agreed to cease and desist by Wednesday as part of a settlement with the NYSGC.
The settlement included money in the sum of PrizePicks' revenue
The settlement amount was $14,969,688, to be exact. It was based on revenue PrizePicks generated through the purported IFS games from New York contestants from June 4, 2019 through Nov. 3, 2023 and estimated revenue from Nov. 4 to Dec. 31, 2023.
Pick'em games aren't the only issue
Though DFS sites like PrizePicks and Underdog Fantasy have come under fire for their pick’em-style games that closely mirror player prop betting, those games alone aren’t the problem here.
The main issue is PrizePicks wasn’t authorized to offer any type of IFS games in New York. So, though New York regulators just recently agreed to ban pick’em games in October, PrizePicks was in violation regardless. Still, the company emailed New York customers on Monday about plans to discontinue pick’em before Thursday, in accordance with state law.
From the email, via LegalSportsReport:
“Due to recent updates in the licensing rules enacted by the New York State Gaming Commission, we put pause our paid contests in the state. After Wednesday, 2/14 at 11:59 p.m. ET, our traditional Pick ‘Em game will not be available.”
PrizePicks could eventually return to New York
According to the settlement, nothing is preventing PrizePicks from applying for registration or licensing by the NYSGC, and that’s exactly what the operator plans to do. PrizePicks will pursue a license to offer its peer-to-peer product in New York, a spokesperson told ESPN.
Peer-to-peer games have been offered as an alternative to the previous pick’em games that pitted customers against the house, thus drawing comparisons to sports betting.
