Ten fantasy sports operators received letters from the Massachusetts Attorney General’s Office this week ordering them to end their pick ’em contests in the commonwealth, saying the game is actually sports betting.
The games in question are single-player games where contestants submit their entries to the operator. Those entries consist of two or more athletes who can play various sports or activities. The fantasy player must decide if each athlete will hit a specific statistical metric. Depending on the rules of the contest, a fantasy player may win money if all or most of their picks are correct.
“This type of wager is a parlay,” stated the letter, which was sent to BoomFantasy, OwnersBox, Parlay Play, RealTime Fantasy Sports, Sleeper, Splash Sports, Chalkboard Fantasy Sports, StatHero, Vivid Picks and Yahoo! Daily Fantasy Sports.
“If you intend to restart offering such games, you must first obtain the required licensure…,” the office added. “At the time of this letter, we are aware that two operators have voluntarily committed to cease their offers of such games in Massachusetts.”
Fantasy operators may offer more than one type of contest, and the MGC’s report does not break down how much revenue was generated by each of their games. The letter did not ask recipients to cease all activities in the state, just the pick’ em-style contests that resemble similar offerings from Massachusetts sports betting sites.
Massachusetts Fantasy, Sports Betting Differ
Massachusetts regulates fantasy sports. However, unlike sports betting operators that must receive a license from the Massachusetts Gaming Commission, fantasy sports operators need only to register with the MGC. Attorney General Andrea Joy Campbell’s office regulates those companies, and they pay a 15% tax on their adjusted gross receipts.
According to MGC records, the 17 registered operators reported earning more than $3.3 million in revenue and paid nearly $520,000 in taxes in January.
The 15% tax is the same rate brick-and-mortar sportsbooks pay the state. However, online sports betting apps, like ESPN BET Massachusetts and BetMGM, pay a 20% tax on their revenues. Both retail and online sports betting operators must also pay a license fee.
“In Massachusetts, we have laws on the books that demand safe and responsible conduct from gaming operators, and when those laws are ignored, my office will not hesitate to enforce them as a matter of public health and consumer protection,” Campbell said. “I want to thank the MGC for their partnership in prioritizing these matters.”
All 10 operators that received the cease-and-desist letters were registered with the MGC as of last month. The largest of those operators was Yahoo!, which reported gross fantasy receipts of nearly $1.9 million and gross revenues of almost $70,000 in January. Yahoo! paid $10,393.33 in taxes. Two operators, Splash Sports and StatHero, reported net adjusted losses of $3,995.35 and $20.95 for the month, meaning they did not pay taxes in January.
MGC Chair Cathy Judd-Stein, who will retire from that position next month, said Campbell’s office is an invaluable partner in helping to stop illegal sports betting games from taking place in Massachusetts.
“To ensure a safe, legal and regulated sports wagering market, every operator in Massachusetts must play by the same rules,” Judd-Stein said.
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PrizePicks, Underdog Change Games
While the letter does not mention the operators that have voluntarily stopped offering the pick ’em games, PrizePicks and Underdog Fantasy have told BetMassachusetts.com they are changing their pick ’em contests to ones that comply with Massachusetts fantasy sports rules. They are among the top revenue producers in the state.
Georgia-based PrizePicks reported adjusted gross receipts of $1.1 million and paid more than $172,000 in taxes for the month, the top amount among the 17 registered operators. A company spokesperson said PrizePicks will switch to its Arena game, a peer-to-peer pick ’em contest, starting March 8. Massachusetts will be the fifth state for the peer-to-peer real-money game.
“We appreciate the Massachusetts regulators willingness to work with us to make sure PrizePicks members and fantasy sports fans have no interruptions in their access to our contests,” the spokesperson said.
Underdog Fantasy, which offers draft-style fantasy games in the Bay State as well, was the third-largest fantasy operator in Massachusetts last month. The Brooklyn-based operator reported adjusted gross revenues of more than $770,500 and paid more than $115,500 in taxes. Although it hasn't sought a Massachusetts betting apps license, Underdog has applied for sports betting licenses in other states including North Carolina.
“In consultation with the Massachusetts Attorney General’s office, we’ve moved to our peer-to-peer pick ’em product in Massachusetts,” Underdog Fantasy Senior Vice President of Government Affairs Stacie Stern.
