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Amid attempts by gambling regulators to rein in businesses suspected of running possibly illegal betting games, a conflict over fantasy sports is intensifying as the Seminole Tribe opens up online sports betting in Florida.
Three fantasy sports operators received cease-and-desist letters from the Florida Gaming Control Commission in September, along with a threat of legal action if the websites didn’t halt right away.
Sen. Joe Gruters (R-Sarasota), however, requests that the commission explain why the companies were singled out and why they may be breaching the law when the two largest companies in the market, DraftKings and FanDuel, aren’t. In a letter dated December 18, the senator brought up the concerns with Lou Trombetta, the executive director of the commission.
Gruters cited the cease-and-desist letters that Trombetta wrote to Betr Holdings, Inc., Underdog Sports, LLC, and SidePrize LLC, d/b/a Performance Predictions LLC, operating under the name PrizePicks.
Gruters’ letter questioned why the commission had not issued comparable threats to “the two largest fantasy sports operators” in Florida.
“The letters definitively state that ‘betting or wagering on the result of contests of skill … including fantasy sports betting, is strictly prohibited and constitutes a felony offense.’ Notably, however, the commission’s public position is less definitive. In the FAQs (frequently asked questions) on the commission’s website, the commission states that ‘wagering on fantasy sports’ is ‘probably not’ legal. I am concerned that the commission is applying an interpretation that is not supported by law and that the commission may be selectively enforcing its interpretation,” Gruters wrote.
Gruters said to The News Service of Florida that he discussed the matter with Trombetta and questioned why FanDuel and DraftKings weren’t singled out.
“I guess the biggest guys have not been issued those letters. And so, for me, it’s just a matter of fairness. I think it should be across the board. I talked to the executive director about that, personally. He was in my office. And I think he said letters were forthcoming, but I don’t think those have gone out yet,” Gruters said in a phone interview Wednesday.
Gruters acknowledged receiving letters from FanDuel and DraftKings.
Eric Carr, the director of external affairs for the gaming commission, told the News Service this week that the agency is “in the process of responding to Sen. Gruters’ letter.”
Even after the cease-and-desist letters were sent, the three daily fantasy sports companies still seem to be running games in Florida on their apps and websites.
The inquiries concerning the fantasy sports companies have arisen before Tuesday’s commencement of the 2024 congressional session.
The three businesses the gaming commission is pursuing have employed a group of lobbyists, including some of the most well-known ones in Florida, such as Ron Book and Nick Iarossi.
Gruters claimed that when he volunteered to introduce legislation to resolve the matter, the commission responded that it was still “processing all the information.” Although there are laws in Florida that govern gambling, there isn’t one that particularly addresses fantasy sports.
Meanwhile, a bill supporting fantasy sports that would resemble federal legislation was submitted by Representative Jason Shoaf, a Republican from Port St. Joe. Shoaf’s measure has not been introduced in the Senate.
The Seminole Tribe has advanced with internet sports betting at the same time as the fantasy sports controversy.
The Seminole Tribe of Florida Chairman Marcellus Osceola Jr. and Governor Ron DeSantis inked a 30-year deal that handed the tribe “exclusivity” over sports betting, including mobile sports betting, across the state. The deal was approved by state legislators in 2021. Under the terms of the agreement, bets may be made using mobile devices from anywhere in the state, and the wagers would be processed on tribal territories. As a condition of the arrangement, known as a compact, the tribe promised to pay the state a minimum of $2 billion during the first five years. Along with granting the Seminoles authority to add craps and roulette to their casinos, the agreement also permitted the tribe to enter into contracts with the state’s pari-mutuel operators to offer sports betting.
A clause in the agreement permitted the holding of “fantasy sports contests.”
However, Jim Allen, the chief of the Seminoles’ gaming operations and a key negotiator of the agreement, claims that the fantasy games that authorities are targeting may violate the compact.
The CEO of Seminole Gaming and chairman of Hard Rock International, Allen, informed the News Service that the games run by the three fantasy companies are prohibited by state law and the compact.
“We made it very clear that we do not have an issue with fantasy sports, specifically with what DraftKings and FanDuel are offering. With that said, when we get to Underdog, when we get to BetR and others like that, there is no doubt, not just in Jim Allen’s opinion, it’s not just the Florida state gaming (commission) opinion, it’s not just in the attorney general’s opinion, but 11 other states … have flat out said what they are doing is gambling, they’re taking live bets, and it’s illegal. And, yes, unequivocally it violates the compact,” Allen said in a phone interview last month.
The tribe launched its mobile sports betting service for a select group of bettors on November 7 and expanded to the entire state in early December.
Regulators’ target fantasy operators, however, maintain that their operations are legal.
“Our very popular fantasy sports platforms continue to operate legally in Florida, and we are certainly not in violation of the compact,” Allison Harris, a spokesperson for a group called the Coalition for Fantasy Sports, told the News Service, when asked to respond to Allen’s comments.
The companies, that offer fantasy contests in the style of “pick ’em style” or “over/under player prop pick ’em” games, are not limited to Florida. Single-player fantasy football players have the option to select from a group of athletes who are given specific results for various actions, like a predetermined yardage or point total. The athletes’ choice to score above or below the predetermined thresholds is made by the players.
On the other hand, DraftKings and FanDuel provide games where many fantasy gamers engage in competition by assembling teams of athletes. Points are awarded to players based on how well athletes perform.
Joe Jacquot, a former general counsel for DeSantis who has worked for DraftKings and FanDuel, presented a legal analysis to the Florida Gaming Control Commission arguing that the three targeted operators violate state law, which permits games of “skill” but forbids games of “chance,” unless permitted.
“FanDuel, as a contest sponsor, merely puts up a purse, for which it does not compete. The companies that received cease and desist letters do the opposite — they participate in the contest and win the prize if the contestant does not correctly guess the winning propositions. Indeed, they say it does not matter under federal law that the contest involves the operator, but Florida law makes that very distinction,” Jacquot wrote in the document obtained by the News Service.
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