Underdog Fantasy has been offering interactive fantasy sports contests in New York since 22 December 2022 on a temporary fantasy licence held by Synkt, now owned by Underdog. The NYSGC on 14 March found Underdog never had a temporary licence in the state and it therefore could not offer “certain types” of contests.
The commission fined Underdog $17.5 million (£13.49 million, €16.05 million). The number is “based on the amount of revenue Underdog’s popular games generated in New York,” per an Underdog email. Underdog stopped offering games in New York on 14 March.
In a settlement, the NYSGC wrote that Underdog “asserts that it [had] operated in New York since 22 December 2022 under a good-faith belief that it had the ability to do so lawfully”. Underdog, according to the settlement, does not “accept or admit” any wrongdoing.
The company will make 12 payments beginning 1 April 2025 through 1 January 2028 to pay off the debt. In the settlement, the NYSGC wrote that it believed Underdog operated in good faith. The company is still eligible to apply for a permanent fantasy or other gambling licence. Synkt must now file tax forms with the NYSGC and pay taxes. A failure to do so would be among what is considered if either company applies for a permanent licence.
Temporary licences have different rules
In its press release, Underdog wrote that it disagrees with the NYSGC decision. The company, according to the NYSGC, cooperated with the investigation. At issue is timing as well as the specific requirements of the temporary licence.
In all states, regulators often issue temporary licences for fantasy sports, sports betting or other gambling licences. The licences can help streamline the application process, but they are easier to revoke than permanent licences. They also allow the regulator additional time before issuing a permanent licence. During that time, a regulator may conduct deeper research into a company, its economic profile and other areas.
“It’s a unique, temporary licence issue specific only to New York and not related to any specific game format we offer,” Underdog general counsel Nicholas Green said via press release. “Any fantasy game created after 2015, no matter the format, is not permitted under the commission’s interpretation of what games a temporary permit holder, like Underdog, can and cannot offer. The high fine amount speaks to the popularity of our games, as the settlement was calculated based on our revenue in New York.”
The NYSGC settlement statement does not indicate which games can no longer be offered. But in its press release, Underdog wrote that it is “withdrawing all of its games”. It further clarified that it is pulling all “Draft” and “Pick’em” contests.
Underdog said in its release it has already filed for a permanent fantasy sports licence that is under review.
Because Underdog cooperated with the investigation and the NYSGC says it will be considered for a permanent licence in the future, the settlement should not affect Underdog’s standing in other states.
New offerings in Delaware, NJ
Underdog also announced it will begin offering its “Pick’em Champions” contests in Delaware and New Jersey later this month. Underdog is now live with pick’em-style games in 36 states. It also offers digital sports betting in North Carolina.
“New Jersey and Delaware have been at the forefront of modern sports gaming regulation and bringing our Pick‘em Champions game to those states is yet another endorsement from highly respected regulatory bodies of the product we built, which much of the industry has now replicated,” Green said.
