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Florida Sends Warning Letter to DFS Operators

The Florida Gaming Control Commission is getting very serious about cracking down on daily fantasy sports (DFS) sites that are rapidly blurring the line between DFS and actual wagering. Three licensed DFS operators, Underdog, PrizePicks, and Betr Picks, received cease and desist letters from the Commission this week warning them that the State believes they are running illegal gambling operations. DraftKings and FanDuel, which also run DFS operations in the state of Florida, did not receive letters.

The letter, which went out on Friday, clearly came as a surprise to the operators, including Nicholas Green, Underdog’s general counsel. According to the Florida Sun-Sentinel, Green fired off a desperate letter to the commission’s general counsel Ross Marshman asking for more clarification. Green asked, “As you might imagine, my exec team asking what the letter means and seeking actionable advice, pretty urgently. Would like to discuss the substance at some point, but if you can help with one question, it would be great. Namely, Underdog operates multiple paid fantasy formats (season-long drafts, daily drafts, pick’em) and I just want to confirm my reading of the letter, which is that the legal conclusion applies to all paid fantasy contests — e.g., all of our contests — and not just particular types.”

Marshman’s was right to the point in his reply, “You reading of the letter is correct.”

So what does that mean for Florida-facing DFS operators? It mainly means that operators will have to hew to the more traditional model of head-to-head DFS with an emphasis on the daily. The operators receiving the letter offer parlay-style transactions that skirt dangerously close to actual gambling, a little too close in the minds of regulators. Though they’ll likely fight the commission on this issue, it will be a long, expensive haul that could be completely subverted by the introduction of regulated sports in the state. Either way, it looks to be a real headache for UnderDog, Betr, and PrizePicks.