Sports betting abounds for those under 21
Fantasy contests offer wagers similar to the parlays of sportbooks
ALBANY — Many young New Yorkers are finding ways to wager money on sports through online applications that may have exposed a loophole in the state law that legalized mobile gaming and are allowing 18- to 20year-olds to gamble.
The apparent workaround, and conflicting definitions of what constitutes “wagering,” has resulted in an untold number of people in that age group being able to place “proposition” bets — when someone gambles on players’ performances in a sporting event but not the outcome. Those wagers largely mirror the “parlay” bets offered on mobile sports wagering platforms.
The companies accepting the wagers from those under age 21 include Underdog Fantasy and PrizePicks in New York, who contend the “fantasy” picks that are offered on their sites constitute games of skill that are not considered traditional wagering.
But online gambling among young adults has soared as the platforms have expanded their gaming options; and the industry has flourished as the state Gaming Commission only recently implemented regulations intended to control the type of wagering that “fantasy” platforms can offer. Still, the line between what constitutes fantasy wagering and legally defined gambling remains blurred.
Jeffrey Wierzbicki, with the New York Council on Problem Gambling, has seen an influx of young adults calling for help after getting in over their heads due to wagers made on licensed sportsbooks and fantasy platforms.
For him, the legal definition of gaming and whether fantasy sports qualify as gambling are irrelevant to those experiencing a problem.
“If they were just paying to get into it for fun, we wouldn’t be having a conversation about it, and no one would enter it. The only reason people are entering it is because there’s a chance they can win more money,” Wierzbicki said. “We’re looking at it as gambling.”
Traditional fantasy sports games allow users to wager on their ability to design lineups of players to compete against other players for the highest point totals. Participants in the leagues, if playing to win money, typically pay entry fees to enter contests lasting between a day to multiple weeks with tiers of prizes for the top scorers. But in addition to those traditional fantasy leagues, the websites also offer parlay-style wagering in which a person can pick several outcomes that particular players must go over or under certain statistics for them to win — such as a football player rushing for a minimum number of yards along with a receiver scoring a touchdown.
The latter type of wagers are almost identical to the ones offered on mobile sports wagering sites, exposing an apparent gap in the law allowing fantasy sports companies to offer parlay-style contests to users as young as 18. The sites also require users to use debit or credit cards to put money in their accounts before wagering — similar to online mobile sportsbooks.
New York’s law on mobile sports wagering, which took effect two years ago, requires that sportsbooks be licensed by the state and only
offer wagering to those who are at least 21. Companies licensed for mobile sports wagering pay a 51 percent tax on their revenue to the state. That revenue netted $862 million in 2023 and was allocated to primarily be spent on education aid, according to Gov. Kathy Hochul’s office.
For the licensed interactive fantasy sports operators, gross revenue is taxed at 15 percent. If a fantasy operator were to pay taxes on parlay-style contest revenue at the same rate as the similar bets offered on mobile sports wagering platforms, their taxes would be nearly 2.5 times higher.
Legality of ‘Pick’em’ contests
New York’s law legalizing interactive fantasy sports, which passed in 2016, stipulates that the games “do not constitute gambling.” Legislators argued at that time whether fantasy sports are games of skill or chance.
The law asserted that fantasy sports users had control over the outcome of their wagers due to their skill in forming a roster.
“The outcome of any fantasy sports contest does not correspond to the outcome of any one sporting event,” the law said. “Instead, the outcome depends on how the performances of participants’ fantasy roster choices compare to the performance of others’ roster choices.”
However, the exotic-type bets offered on fantasy platforms have evolved to nearly mirror the types of wagers available on mobile sports wagering sites.
For “Pick’em” — a contest run by Underdog Fantasy similar to parlay wagers — and other similar contests, however, companies have set it up so “rosters” include a wager based on statistical outcomes for at least two players from different teams.
Companies offering these wagers have also amended contests from having users compete against each other to having users compete against the house, or company itself.
“Get 5 picks right and you’ll 20x your money!” the site promises.
Although the sites claim to be taking wagers on games of skill, the outcome for those placing bets can be no less consequential for the people gambling on mobile sports wagering sites.
A player can pay an entry fee to win a contest on Underdog or PrizePicks based on a certain quarterback throwing a touchdown — or not — and another player having more or less than a set number of rushing yards, for example. An identical parlay betting on the same two statistics for the same two players can also be placed through most mobile sports betting platforms.
It’s unclear whether regulators or law enforcement agencies have examined the evolution of the fantasy wagers and whether they have crossed into the realm of online gambling, which the operators dispute.
Underdog Fantasy, which is based in Brooklyn, has a temporary permit for interactive fantasy sports and filed an application with the New York State Gaming Commission to continue operations, spokesman Brad Maione said.
PrizePicks does not have a permit to operate interactive fantasy sports in New York. Jason Barclay, the chief legal officer and head of public policy for the company, said that PrizePicks has filed an application. But the company did not submit an application to the state Gaming Commission by a Jan. 16 deadline to continue operations in New York, records show, though it is still available to users.
The Gaming Commission, which regulates all gaming activity in New York, approved regulations for interactive fantasy sports in October that include prohibiting the singular selections that — when at least two are selected — make up “Pick’Em” style contests offered by Underdog and PrizePicks.
“Contests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting,” the regulations say. “Contests in which a contestant must choose, directly or indirectly, whether an individual athlete or a single team will surpass an identified statistical achievement, such as points scored, are prohibited.”
PrizePicks contends that their contests are not proposition-style betting, given the way the word “bet” is defined under the Unlawful Internet Gambling Enforcement Act, a federal law passed in 2006, which says that a bet does not include fantasy or simulated sports.
“You cannot have a contest — where you have an entry fee — where you’re just predicting the performance of a single athlete,” Barclay said. “You must really be assembling a true roster.”
The gaming platform allows users to enter contests based on the performances of any two or more athletes. Most standard season-long fantasy sports have a roster of at least 10 athletes and all participants generally want the players to do well. In the fantasy parlay-style bets, those placing a wager can also wager on a player performing poorly — such as running for fewer yards then they are expected to gain in a football game.
The pick’em contest resembles games offered by PrizePicks, which only offers wagering to those 19 and older.
Other interactive fantasy sports operators, including FanDuel and DraftKings, focus on roster-based contest, with users competing against each other for the best lineups, and do not offer any parlay-style games on their fantasy platform. But they do offer parlaystyle and straight wagering on their authorized sportsbook mobile wagering sites, which are separate from the fantasy apps and require someone to be 21 or older and to verify their identity.
The authorized sportsbooks also verify a bettor’s location through their mobile phone or other device. If a person registered with their online platform in New York travels to a state where mobile wagering is prohibited, such as Florida, the online applications will not allow a wager to be placed.
Users have to deposit money into their account before being able to wager. Those deposits can be made using a credit card, debit card or PayPal account.
Mobile sports wagering in New York allows a maximum $2,500 per person, per platform to be deposited through a credit card each year. That limit is intended to curb problem gambling and money laundering through platforms. Interactive fantasy sports depositors do not have a credit limit imposed by the state.
The Times Union created a test account on Underdog Fantasy, depositing an initial $25. When prompted whether the player wanted Underdog to match the deposit, up to $100, the Times Union agreed, accidentally depositing an additional $50 into the account with a single tap because the system auto-populated a second deposit amount of $50.
Upon reaching out to the company to remedy the deposit, an Underdog representative asserted that the prompt was not “misleading” and declined to refund the second deposit.
In email correspondence with the Times Union’s test account, the fantasy sports company’s customer service rep said that problem gambling help lines and other addiction resources are featured prominently on their website — despite arguments that their contests do not equate to gambling — due to the risk of gambling addiction from the fantasy contests.
“Gaming of all kinds can feed into an addition (sic), and when money is on the line, it can become that much more dangerous,” a company customer service representative wrote. “We want our customers to have the ability to limit themselves or get any help that is needed, as fantasy sports is meant to be entertainment.”
Adam Warrington, vice president of responsible gaming at Underdog Fantasy, said the company offers recommendations to users to help identify and address problem gaming.
“Everyone at Underdog takes responsible gaming extremely seriously,” Warrington said in an emailed statement. “Player protection has always been built into the foundation of our platform and we pride ourselves on leading by example and do everything in our power to foster a safe, healthy, and sustainable playing environment.”
Problem gambling
Wierzbicki, who works for the New York Council on Problem Gambling, said that even if fantasy sports may not be considered games of chance or gambling, their organization sees little difference.
“People argue that it’s a game of skill and I would say that if you put me picking a team against my mom, I would probably win. But there’s so many randoms involved with the weather and with people getting injured; just anything can happen during the sporting events,” Wierzbicki said.
Wierzbicki said that gambling is defined as risking something of value on a game of chance for a reward. Given the many aspects of chance in fantasy contests, he personally considers the games to be gambling.
Wierzbicki said that dopamine surges that players often experience while using fantasy sports apps and mobile sports wagering platforms are as intense as those using illegal drugs. He said that individuals are experiencing problem gambling whenever their loss of money is having a negative effect on their lives, either socially or mentally. For some individuals, the problem is severe enough to be considered a gambling disorder, which is diagnosable by a medical professional.
“Most people don’t look at gambling as a problem, or being able to develop a problem, because you’re not putting a substance into your body,” Wierzbicki said. “So that’s where a lot of people get into trouble. They don’t realize gambling can become addictive.”
The New York Council on Problem Gambling operates centers across the state to connect problem gamblers and their family with counselors and treatment options.
With mobile sports wagering just passing a two-year anniversary in New York, the industry has raked in more than $34.4 billion in wagers and more than $3 billion in profits, with $1.5 billion going to the state in taxes.
Kristen Sweeter, director of problem gambling resource centers for the New York Council on Problem Gambling, said that the organization has increasingly received requests for help related to problem behaviors with sports betting from young bettors.
“Younger folks are risk-takers by nature,” Sweeter said, noting that some parents find out their children have a problem only after they discover they have lost significant sums of money. “They seek low-intensity, high-reward activities.”
Sweeter also said that the accessibility of sports betting allows young people to use their phones to place wagers instantly, often allowing for more risk-taking behavior with the financial aspect feeling less tangible.
‘Games of skill’
FanDuel and DraftKings were among the first fantasy sports companies operating in New York. The companies, which are now major players in the mobile sports wagering industry, were sued by former Attorney General Eric Schneiderman in 2015 over their practices, bringing the legality of fantasy sports wagering in New York to the forefront.
The companies settled the lawsuit for $6 million each over false and deceptive advertising practices but continued to operate following the passage of the fantasy sports law. They added mobile sports wagering to their platforms in 2022 after New York lawmakers legalized it.
In December 2015, the state Assembly’s Committee on Racing and Wagering convened a hearing at the Capitol that examined the fantasy sports industry before drafting the law that would declare the contests are not a form of gambling. It paved the way for their operations in New York.
Peter Schoenke, who was then chairman of the Fantasy Sports Trade Association, testified at the hearing that the concept of fantasy sports had been around for decades and “remained the same throughout.” Whether someone is building a lineup for a seasonlong contest against friends or a daily contest against strangers, the skills required are the same, Schoenke said.
In the more than eight years that have passed since that hearing, however, the concept behind the play of interactive fantasy sports has changed significantly through the popularization of “Pick’em”-style contests, resembling parlays, with players not assembling a complete lineup of players. Just like wagers on mobile sportsbooks, players can place a bet and win sometimes several times their wager if multiple picks are correct — such as a player scoring more than two touchdowns and another player catching at least six passes in a football game.
During the debate before passing the interactive fantasy sports law in June 2016, many legislators supported authorizing fantasy sports wagering. They said the contests were extremely popular among New Yorkers, who valued the games as a form of entertainment.
Other legislators who voted against the bill voiced concerns about whether deeming interactive fantasy sports as different than gambling was within the Legislature’s power or had to be done with a constitutional amendment.
The state Court of Appeals ruled in 2022 that fantasy sports games are different than sports betting, which was still federally prohibited when the fantasy sports law was passed. In White v. Cuomo, the court sided with those who passed the law, deciding that the contests are “games of skill” rather than “games of chance,” which amount to gambling.
Former Assemblyman Tom Abinanti, a Westchester County Democrat, said that opposing the bill was one of the only times he sided with Assembly Minority Leader Pro Tempore Andy Goodell, a Chautauqua County Republican.
Abinanti said that he believed the law violated the state constitution’s prohibition of gambling and that he was concerned about how it could allow exceptions to “gambling” to proliferate.
“What I foresaw was people trying to evade the proposed limitations,” Abinanti said. “They’ve released a pathogen that they can’t now control.”
The former legislator said that the state has a responsibility to regulate the fantasy sports platforms to ensure they are diminishing the potential for future gambling addictions.
Intra-industry conflict
Following the state Gaming Commission’s decision to ban proposition-style betting under fantasy sports, Underdog Fantasy founder and CEO Jeremy Levine wrote an open letter to “Underdogs,” as he calls the platform’s users.
“As you may have seen, the right to play our fantasy sports contests has recently come under attack. The attention is not organic — it’s being directly fueled by the companies with a virtual monopoly in sports gaming: FanDuel and DraftKings,” Levine wrote. “They are waging a campaign in backrooms across the country, using their deep pockets and political muscle to try to influence government officials, and exerting their market power to influence our business partners.”
Levine alleged that the two major sports betting companies were trying to monopolize the mobile sports wagering industry and were threatened by Underdog’s rise in the fantasy sports industry. Levine said that his company’s and others’ innovation in “fantasy sports and sports betting threaten their monopoly.”
The Underdog founder also specified that fantasy sports needed to adhere to three requirements: that contests be games of skill, that they be based on two or more athletes on different teams and that the outcomes be based on athletes’ real-world performances. Levine asserted that “Pick’em” wagers clearly met those requirements.
“Equally important, in nearly every state where a sports betting law has been passed, the law makes crystal clear that fantasy sports are not sports betting,” Levine wrote. “Explicitly, these laws state that if a contest is fantasy sports, it is therefore not sports betting.”
The Fantasy Sports Alliance, which represents companies including FanDuel and DraftKings, declined comment on Underdog Fantasy’s and PrizePicks’ parlaystyle contests.
The alliance emphasized their support of continuing to allow and regulate fantasy sports contests in New York.
“Fantasy sports is a game of skill enjoyed by lots of New Yorkers, which is why New York’s law even describes fantasy sports as a ‘major form of entertainment for many consumers,’” Tess McRae, a spokeswoman for the Fantasy Sports Alliance, said in a statement. “New York’s fantasy sports law is a model for the rest of the country, allowing participants to compete against each other all while incorporating strong consumer protections, robust safeguards to keep children from playing illegally, and tough standards to promote responsible play. Our members are proud to operate the most popular fantasy sports sites in the state and they do so in full compliance with these requirements.”