The ongoing war between regulated sportsbooks in the United States and DFS operators continues, with Underdog Fantasy CEO Jeremy Levine penning an open letter to customers lambasting the criticism and pressure prop-style DFS products have been receiving.

Levine claims Underdog was founded “to build games for American sports fans to increase their enjoyment of sports”. He then moves to claim the recent media attention and hubbub is “not organic”, but instead being directly fuelled by regulated sportsbook operators – explicitly naming “the companies with a virtual monopoly in sports gaming: FanDuel and DraftKings”.

The product that has come under recent scrutiny is proposition betting, or ‘prop-bets’. Generally the feature is beyond moneyline, and allows a customer to make specific picks on a player depending on the market. These have been likened to Over/Under markets offered by a traditional sports book, as it pits players against the house and not other players.

Recent pressure has seen Wyoming’s regulator send cease and desist letters to PrizePicks and Underdog, with LegalSportsReport reporting the Wyoming Gaming Commission accused both fantasy apps of offering “illegal unlicensed sports betting”.

Underdog’s CEO points back to the mid-2010s where FanDuel and DraftKings spearheaded the campaign to legalize DFS and ensure operators could continue with a landmark ruling in New York. With the repeal of PASPA in 2018, states across the country have begun offering legalized sports betting. Legalized online sports betting in New York was also seen as a landmark victory in the sports betting legalization battle. Arguably, only California sports betting or perhaps legalized Texas sports betting would be comparable scalps.

Each state drafts its own regulations, and Levine argues that “DraftKings, FanDuel and their lobbyists” have erected barriers to entry making it nigh-on impossible for “innovators to break into the brand-new sports betting industry”.

He adds: “the strategy worked, and they had a near instant monopoly, capturing nearly 80% of the U.S. sports betting market”. The two companies’ reaction, Levine argues, is a result of being threatened by innovation. He argues Underdog are “already bigger than they are in fantasy”.

“Frankly, they should be scared”

Levine also adds a short legal defense of the products offered. His defense reads:

“They can’t tell policymakers and others they don’t like competition, so FanDuel and DraftKings have constructed a disingenuous narrative that our fantasy sports contests are illegal. The arguments are ironic, ignoring the letter of the law for the same flimsy “feels like sports betting” line that critics have always lobbed at their paid fantasy sports contests. That’s why, despite more than a year of effort and tons of lobbying dollars, FanDuel and DraftKings are losing the fight with regulators.

“This isn’t a good-faith fight on the legal merits; it’s a convenient mask for a pure anti- competitive effort.”

A clear, simple fantasy sports legal framework exists because of the laws they wrote and their claims directly contradict those laws. And it’s pretty simple – under those laws, a fantasy sports contest must have three core characteristics:

  • A game based on skill;
  • Use predictions on two or more athletes from different teams; and
  • Have the outcomes based upon those athletes’ accumulated statistics in real- world contests.
  • Every single one of our contests meets that simple definition. Fantasy sports is not limited to only FanDuel and DraftKings’ salary cap contests. The laws they wrote say fantasy sports is far broader than just salary cap.

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. Explicitly, these laws state that if a contest is fantasy sports, it is therefore not sports betting.”

The letter continues to lament the effort of FanDuel and DraftKings to “curb innovation”. He claims “DraftKings and FanDuel want to prevent you from playing the fantasy sports you love. They want to quash competition in fantasy and stop innovation, and potential rivals, in sports betting”.