This Is The End
DFS 2.0 contests have been under fire for nearly a year, but the fallout from a string of events last week could be a tipping point.
The Bulletin Board
NEWS: DFS 2.0 operators lose ground, with adverse outcomes in 4 states.
BEYOND the HEADLINE: The transition away from DFS 2.0.
WEEKEND CATCHUP: New Jersey considers slots at tracks; Jackpocket acquired by DraftKings
NEWS: A gambling expansion package that includes mobile sports betting has passed the Alabama House. Faces stiffer opposition in the Senate.
QUICK HITTER: The latest efforts to ban smoking at Atlantic City casinos.
AROUND THE WATERCOOLER: Help wanted: Online poker seeks PR professionals.
STRAY THOUGHTS: What’s your value?
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From Bad to Worse: DFS 2.0’s Toughest Week Yet
Author’s Note: Underdog Fantasy is a newsletter sponsor.
Pick ’Em style DFS games have been a hot topic of discussion during the last year. The future of the product has been uncertain, as DFS 2.0 operators have lost their fair share of battles, but they have also scored some victories.
That changed last week when two of the most significant states they serve, as well as two others, came down on the negative side of the ledger. While by no means the end, these developments tip the scales against the DFS 2.0 industry.
Here’s a quick rundown of the week that was for DFS:
Last week, PrizePicks announced it would cease offering Pick ‘Em games in New York, followed by the news that it had reached a $15 million settlement with New York regulators for “operating without a license.”
Kansas has ordered six DFS operators to leave the state. “I can confirm that we have sent out six cease-and-desist letters to date to various parties who may be in violation of Kansas law,” Kansas Racing and Gaming Commission General Counsel Judith Taylor told Legal Sports Report. Underdog pulled its Pick ‘Em contests from Kansas in November.
The Arkansas Department of Finance and Administration has also sent cease & desist letters to PrizePicks and Underdog. Per the announcement, “Arkansas law does not allow these operators to offer unlicensed sports betting. These unlicensed operators are not required to verify if a participant is 21 years of age, and they do not pay the taxes associated with sports betting.”
The biggest shoe to drop is Florida, with PrizePicks and Underdog both announcing they would exit the state on March 1, following a second cease & desist letter sent by Florida regulators promising no further action if the companies left the state by March 1 - the first C&D was sent in September 2023.
DFS 2.0 is also on the radar in California (which got a little messy recently) and Virginia. Losing either state, particularly California would make an already difficult situation far, far worse.
The trend is also going in the wrong direction if you’re a DFS 2.0 operator. As North Carolina reporter Brian Murphy said on X, “NC postponed its fight over whether these types of fantasy operators are actually gambling, in part to see what other states do. Well, other states are starting to ban them.”
Not to be missed, the American Gaming Association is now lumping DFS 2.0 into its “illegal gambling” bucket.
For those interested in going down the DFS 2.0 rabbit hole, I’ve written extensively about it (here, here, and here).
Beyond the Headline: Pivoting Away From DFS 2.0
It’s not all doom and gloom for PrizePicks, UnderDog, and other DFS 2.0 companies. Their nimbleness and product innovation have allowed them to adjust to the rapidly changing landscape.
Both companies have tweaked their offerings to comply with the new regulatory reality in states like Colorado and Alabama. They also launched new peer-to-peer and free-play products in states that have restricted their vs.-the-house Pick ‘Em games.
PrizePicks launched a free-to-play version of its games in Michigan in November. It also plans on launching the format in New York. A couple of weeks ago, it launched a P2P game called PrizePicks Arena.
Underdog launched its own P2P game, dubbed Pick ‘Em Championship, in four states in November. Underdog is also preparing for its sports betting debut. The company has secured a partner in North Carolina and is expected to be part of the March 11 launch.
Weekend Catchup: New Jersey Considers Slots at Tracks; Jackpocket Acquired by DK
With New York casinos on the horizon, New Jersey lawmakers are trotting out all of their greatest hits, including State Sen. Joe Pennacchio, who is proposing adding slot machines to the state’s racetracks (an idea that has been around for years). Under the bill, SCR 14, Atlantic City’s casinos would operate the machines, which would be taxed at 50%.
The news of the week was the acquisition of Jackpocket by DraftKings in a $750 million deal. This story has many threads that could fill ten newsletters, so for now, I’ll direct you to the best coverage available. I will take a deep dive into the online lottery and online lottery courier service market in this week’s feature column.
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Alabama Sports Betting Bill Passes House
A comprehensive gambling expansion package that would legalize sports betting is weaving its way through the Alabama legislature.
Following a favorable hearing earlier in the week, the Alabama House of Representatives passed a gambling expansion package on Thursday. A key hurdle was overcome when two mental health groups, somewhat unexpectedly, spoke favorably of additional funding in the gambling expansion package. However, there was also opposition, including concerns voiced by the Poarch Band of Creek Indians.
The measure, which seeks to legalize casinos, lottery, and retail and mobile sports betting, passed the Alabama House. It will now head to the Senate, where it’s expected to meet with more significant opposition.
A constitutional amendment is required to expand gambling in Alabama. As such, the bill requires a 60% affirmative vote in both chambers, Gov. Kay Ivey’s signature (the governor has come out in support of the measure), and a voter referendum in November.
Previous Alabama coverage from STTP here (last week) and here (Nov. 2023)
Play USA’s Matthew Kredell’s terrific breakdown of the specifics of the bill
Quick Hitter: Latest on the Atlantic City Smoking Ban
In 2024, one of the only places you can smoke indoors is at a casino. Atlantic City was on track to prohibit smoking in casinos last year, but pushback from casinos (who had their own vision of how the matter should be handled) derailed that effort.
The conversation has been restarted in 2024, but a new bill (S 2651) introduced by State Sen. John Burzichelli would keep the status quo in place, albeit with increased enforcement of the current rules.
Burzichelli’s bill is modeled on the casinos’ proposal. Per the AP, Burzichelli’s bill would “allow smoking in unenclosed areas of the casino floor that contain slot machines and are designated as smoking areas that are more than 15 feet away from table games staffed by live dealers.
“It also would allow the casinos to offer smoking in enclosed, separately ventilated smoking rooms with the proviso that no worker can be assigned to work in such a room against their will.”
Around the Watercooler
Social media conversations, rumors, and gossip.
As bad as things have been for DFS, poker is faring even worse.
And then there is this, as a GG Poker player is crying foul over how the site distributed a bounty.
Reporting on: Jason Koon’s departure - The Bounty Situation - The Superuser allegations.
That is in addition to a situation at partypoker, first broken by PokerFuse, that saw the company not fully pay out a Spins jackpot (more details from Poker.org). The original 2+2 thread has since been deleted, h/t Nick Jones.
Stray Thoughts
It’s easy to see the value of others but very difficult to determine your worth.