What New York’s Updated Fantasy Sports Regulations Mean For Players And Bettors

New York’s Updated Fantasy Sports Regulations
Published by NYSB Staff
Last Updated: 18. Oct 2023.

On October 5, the New York State Gaming Commission outlawed fantasy sports competitions based on one of the most popular betting options. DFS players will no longer be able to take part in daily proposition contests.

The Empire State’s gambling regulator concluded that such events are sports betting by a different name and has created a clear legal definition of what prop bets really look like. The specific forms now banned are over/under predictions in a player vs. the house format.

Rather than being dismayed by the new ruling, however, it was actually DFS and sports betting giants DraftKings and FanDuel who pushed for the legal clarification in the first place. But why, and how will this affect those whose preference is prop betting?

Why The NYSGC Moved to Ban DFS Prop Games

With the updated regulations, New York has become the fourth state to legislate against player-prop, over/under fantasy contests. In recent times, these competitions have been increasingly popularized by Underdog and Prize Picks.

Those two operators in particular had allowed players to bet on props that are very similar to prop betting markets offered by sportsbooks. The pair that have done so much to popularize fantasy competitions - DraftKings and FanDuel - are thought to have been key protagonists calling for the move.

Neither company explicitly offers such “pick-em” games under their DFS offerings which likely explains their opposition to them as competition to their sportsbook player props and over/under markets.

Indeed, it was just last month that Cesar Fernandez, the FanDuel senior director with responsibility for state government relations nationwide expressed his frustration at what he perceives to be “illegal sportsbooks” posing as fantasy providers.

In its statement announcing the change, the Gaming Commission said that these types of contests are “essentially sports betting” - a view echoed by their counterparts in other states including Florida, Wyoming and Michigan.

What The Fantasy Sports Rule Change Means For Sportsbook Customers

There’s a strong argument that the tightened DFS rules in New York will directly strengthen the position of market leaders FanDuel and DraftKings. As a knock-on effect though, they could also benefit the state’s other legal sportsbooks including the likes of BetMGM.

We may see intensified competition between NY’s sports betting sites, jostling for increased business from displaced players who enjoy prop bets. For the state’s sportsbooks, this may yet present a growth opportunity in an industry already experiencing a slowdown in new customers. 

That can only benefit sports bettors though the move will disappoint fantasy players who may choose not to switch to placing wagers.

However, evidence suggests that casual bettors actively prefer high-variance, high-margin wager types, of which prop bets form a part. Prop bets can make up to as much as 20 cents for every dollar wagered on NFL games.

Development of such markets into some form of hybrid, taking the best bits of the former DFS “pick-em” format with traditional sportsbook-style prop bets may yet see further innovation by the sportsbooks.

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