New York Gaming Commission Approves Fanatics Sportsbook, Bans Daily Fantasy Sports

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Fanatics Sportsbook has successfully secured approval to commence operations in New York, following this week’s unanimous vote by the New York State Gaming Commission (NYGC).

This approval comes after Fanatics acquired the U.S. assets of PointsBet earlier in 2023, which was already licensed to offer New York online sports betting services.

Fanatics, the giant sports merchandise operator now moving into sports betting, was allowed to rebrand PointsBet to PointsBet: A Fanatics Experience in seven states as it works on regulatory approval for the changeover. However, New York was not one of those. Despite the new approval, there is no direct time line for a Fanatics launch in the largest U.S. sports betting market, which averages a billion dollars in bets a month.

The license will only cover online betting, as there are currently no full-service retail sportsbooks in New York outside of tribal casinos.

“Today, the New York State Gaming Commission approved Fanatics Betting and Gaming’s acquisition of PointsBet New York LLC. We would like to thank the commissioners and staff of the New York State Gaming Commission for their time and effort in delivering us some great news today,” said a Fanatics Betting and Gaming spokesperson after the meeting.

During Tuesday’s meeting, the Commission also discussed the controversial rise of Pick ‘Em prop bets from daily fantasy sports operators. Just like lawmakers in Florida recently decided, the NYGC also opted to clarify they’re in favor of banning the games.

Regulatory Scrutiny and Ethical Advertising

Despite the approval for their launch in New York, concerns linger regarding Fanatics’ advertising and promotional strategies.

The NYSGC has expressed concerns about potential cross-promotion between Fanatics’ Topps trading card subsidiary and sports betting, seeking assurance that such promotions will not occur. Fanatics has assured that it will adhere to state regulations and avoid advertising to underage individuals.

“As you well know, the commission has over the past year been very concerned about advertising and promotions to people that are under age,” said NYGC chair Brian O’Dwyer.

“Can you give us an assurance that there wouldn’t be any sort of cross-promotions between the trading cards and sports betting?”

The Fanatics representative confirmed that it aims to always abide by state regulations and will not be advertising to potentially underage individuals.

The Commission also pressed Fanatics on the potential for crossover between its huge merchandise business and the sports betting operation. Fanatics Betting and Gaming Chief Business Officer Ari Borod brought up the company’s huge 100 million database of merchandise customers in a recent podcast interview.

However, combining the two for promotions has not proved popular with regulators when it has tried so far. After its soft launch in the Ohio online sports betting market, Fanatics tried a cross promotion offering free bets with merch purchases. But regulators in the Buckeye State quickly shut that down.

This week, NYGC sought assurances that the same would not happen in New York, now that Fanatics has been granted a license.

“I think the real problem that I’m grappling with here is unique to you among all our licensees here, is that there is that potentiality of you taking that portion of your business (collectibles, trading cards, merchandise) and using them in a promotion (for sports betting). … I think what I really need from you is a representation that that will not occur,” said O’Dwyer.

A Blow to DFS Pick’em-Style Contests

In a parallel development during this week’s meeting, the New York Gaming Commission has officially adopted rules to ban player prop over/under daily fantasy sports contests in the state. That makes New York as the fourth state this year to crack down on this style popularized by DFS sites like PrizePicks and Underdog.

The commission has characterized such contests as essentially being sports betting, which is authorized for licensees only and is under different regulations than those governing DFS.

This move has sparked controversy, especially among companies like PrizePicks, Underdog, and Betr. They argue that the dominant operators FanDuel and DraftKings, which helped build the market before becoming full sportsbooks upon legalization, are now attempting to monopolize it by fighting to ban the type of DFS wagers offered by their smaller competitors.

These DFS operators argue that their pick ‘em games do not violate state laws, and some have formed a Coalition for Fantasy Sports to fight for their right to continue offering their services.

“We are meeting regularly with the NYGC to discuss the future of fantasy sports in New York. We are grateful for the advocacy efforts of our many members in the state, and will work with policymakers to ensure that they can continue to play the fantasy sports they know and love,” said a spokesperson for PrizePicks.

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