PrizePicks Reaches $15 Million Settlement with NYSGC for Unlicensed Operations

This settlement not only marks a turning point for PrizePicks but also serves as a cautionary tale for the DFS industry at large, highlighting the importance of adhering to state gambling laws and regulations. As PrizePicks moves forward with its plans to operate legally in New York, its efforts to modernize DFS laws could pave the way for a new era of regulated, safe, and profitable fantasy sports betting in the state.

A Costly Oversight for PrizePicks

In a significant development within the daily fantasy sports (DFS) sector, PrizePicks has consented to a $15 million settlement with the New York State Gaming Commission (NYSGC). This agreement comes after the DFS operator was found to be conducting business in the Empire State sans the requisite gambling license, a move that placed it squarely “in violation of New York law” for an extended period.

The Basis of the Settlement

The settlement’s magnitude, precisely $14,969,688, is anchored on PrizePicks’ revenue from fantasy contests involving New York bettors from June 4, 2019, to December 19, 2023. This period saw the company offering fantasy contests without the NYSGC’s approval, culminating in a calculated penalty that includes a day-to-day analysis of the contests provided. The stipulated payment deadline is March 1, 2024, underscoring the urgency of compliance.

NYSGC’s Stance and Recent Regulatory Changes

A NYSGC spokesperson succinctly remarked, “The settlement speaks for itself,” highlighting the resolution’s clarity and the commission’s stance on unlicensed gambling operations. This settlement follows the NYSGC’s introduction of new DFS regulations in October, which included explicit prohibitions against proposition betting-like contests in DFS, affecting other operators like Underdog Fantasy and Sleeper in addition to PrizePicks.

PrizePicks’ Departure and Future Plans

Coinciding closely with the announcement of these fines, PrizePicks declared its exit from the New York market, effective February 15, shortly after Super Bowl LVIII. This decision reflects the regulatory landscape’s evolving nature and the company’s commitment to compliance. Despite this setback, PrizePicks has expressed its intent to “pursue” a New York license, aiming to reintroduce its peer-to-peer product legally.

A Forward-Looking Approach

PrizePicks’ spokesperson shared an optimistic outlook, emphasizing the resolution’s positive aspects and the company’s eagerness to collaborate with New York state officials. By advocating for the modernization of New York’s DFS laws, PrizePicks aspires to offer contests that are both popular among New Yorkers and conducive to generating state tax revenue, all while ensuring robust consumer protections.

Conclusion: Navigating Regulatory Waters for a Legal Comeback

PrizePicks’ journey from regulatory oversight to proactive compliance underscores the complexities of operating within the highly regulated DFS market. The company’s willingness to settle with the NYSGC and its plans to secure a proper license reflect a strategic pivot towards legality and consumer safety. As DFS continues to grow in popularity, the dialogue between operators like PrizePicks and regulatory bodies like the NYSGC will be crucial in shaping an environment that benefits all stakeholders—operators, players, and the state alike.