The fuzzy line between sports betting and fantasy games

This story is republished from Virginia Mercury. Read the original article.

Virginians now have multiple ways to try to make money wagering on sports. Whether the state treats it as gambling or not depends on which app you use.

State lawmakers are expressing growing concern about the fuzzy line between sports betting and fantasy sports contests that have gotten closer and closer to mimicking full-blown gambling. Several states have already clamped down on fantasy apps for getting too close to sports betting, and Virginia could be next.

“It’s a compliance nightmare,” said state Del. Paul Krizek, a Democrat, who’s planning to introduce legislation for the 2025 General Assembly session clarifying the state’s approach to sports wagering.

Fantasy sports games are tied to how well a group of individual athletes selected by the fantasy player perform. In 2016, Virginia became the first state in the country to formally legalize fantasy contests with cash prizes at stake.

Full-blown sports betting, which Virginia legalized in 2020, lets gamblers put money on the outcome of a particular sporting event, taking their chances on whether a team will win or lose or on how many points both teams will score.

The blurriness between fantasy and betting comes from proposition bets, which involve wagering on specific metrics like how many passing yards an NFL quarterback will throw for, or how many rebounds an NBA player will grab. In prop betting, gamblers try to predict whether an athlete will go over or under a stat number set by oddsmakers.

There’s an abundance of prop bets available on sports betting apps in Virginia, which are subject to gambling taxes and age limits preventing anyone under 21 from wagering. However, a nearly identical form of prop betting is now offered on fantasy platforms that don’t generate gambling taxes and are available to anyone over 18.

“This could lead to some cause for confusion,” John Mohrmann, a lobbyist for the sports betting company DraftKings, told Virginia General Assembly members at a recent meeting of a subcommittee focused on how the state could make its gambling laws more cohesive.

Krizek, who helps lead that subcommittee, said that, at a minimum, the age limit should be 21 for both sports betting and for-cash fantasy games.

“It needs to be reined in,” he said in an interview.

Traditional fantasy sports contests, which predate the current sports betting boom, involve assembling a roster of players from different teams, then measuring that roster’s statistical performance against an opponent’s roster. The newer type of fantasy contest—offered on apps like PrizePicks and Underdog Fantasy—allows users to instead try to predict the stats of as few as two individual athletes, without competing against other fantasy players.

To demonstrate the discrepancy in the state’s newly relaxed gambling laws, Mohrmann explained different ways Virginians can try to make money off two of the best players in football.

On sports betting apps, wagerers could place a prop bet that San Francisco 49ers running back Christian McCaffrey would get more than 90 rushing yards coupled with a bet that Kansas City Chiefs quarterback Patrick Mahomes would throw for more than 260 passing yards. 

That two-pronged parlay bet on big-name sports betting apps like FanDuel and DraftKings would pay out a little less than $25 in winnings on a $10 wager, Mohrmann said.

An equivalent $10 “entry” fee on the fantasy sports platform PrizePicks, he said, would pay out $30 if a user correctly predicted both Mahomes and McCaffrey would exceed the same yardage numbers.

Though there may be virtually no difference between the two to the bettor, the regulatory system created by state policymakers has two different agencies enforcing two sets of rules for what is essentially the same activity: Trying to win money by foreseeing sports outcomes.

“I think they’re kind of taking advantage of the lack of regulatory oversight,” Krizek said of the fantasy sports apps’ efforts to recreate player prop bets.

In a statement, a group called the Coalition for Fantasy Sports noted “Virginia was at the vanguard of protecting fantasy sports” and said the companies it represents are “committed to being fully compliant both federally and in the commonwealth of Virginia.”

“As licensed operators, we look forward to working with legislators now and in the future to ensure all fantasy contests are regulated appropriately and Virginians get to continue to play the games they love,” said JT Foley, the coalition’s executive director. The coalition is made up of PrizePicks, Underdog Fantasy, Betr and Dabble.

Sports betting is regulated by the Virginia Lottery, which requires betting platforms to pay a $250,000 fee when first applying for a permit and a $200,000 yearly renewal fee. Fantasy sports are overseen by the Virginia Department of Agriculture and Consumer Services (VDACS), which assesses an $8,300 fee for initial permits and yearly renewals.

Regular sports betting apps also generate money devoted to gambling addiction resources. Fantasy apps do not.

Republican state Sen. Bryce Reeves zeroed in on that point during last week’s meeting of the gambling commission study committee he leads along with Krizek.

“We look forward to working with you to kind of clean some of this up and get it to fair and equal ground,” Reeves told the representative from DraftKings, which offers both regular sports betting and fantasy contests in Virginia.

Attorney General Jason Miyares weighed in on the issue in a formal advisory opinion late last year. He concluded that the type of fantasy games in question should legally be considered sports betting because players aren’t competing against other players.

In light of that, Miyares wrote, any fantasy operator offering games based on over/under stat lines “must comply with the permitting requirement of the sports betting program established by the Virginia Lottery Board.”

The Miyares opinion doesn’t appear to have sparked any major enforcement against fantasy operators in Virginia.

In several other states, fantasy operators have agreed to pay steep fines or have ceased operations altogether as regulators have reined in pick’em style games. Several companies that have come under scrutiny elsewhere are listed among the 17 fantasy operators licensed in Virginia by VDACS. The Lottery has issued 15 active sports betting permits. 

Asked why regulators haven’t enforced the attorney general’s interpretation of the law, VDACS spokesperson Michael Wallace said the agency “does not have jurisdiction over sports betting.” He also said the state doesn’t collect data on how much money Virginians are spending on fantasy sports.

The Lottery collects that data for sports betting. In 2023, Virginians bet roughly $5.6 billion on sports.

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