Kansas gaming regulators have asked six daily fantasy sports apps to exit the state over allegations of “illegal sports wagering”, according to findings from a report. Among the companies named in the cease and desist letter was Underdog, one of the country’s most popular platforms for fantasy sports.
In a statement, Kansas Racing and Gaming Commission General Counsel Judith Taylor said:
“I can confirm that we have sent out six cease-and-desist letters to date to various parties who may be in violation of Kansas law.”
In a copy of the letter dated Sept. 7, 2023, the Kansas Racing and Gaming Commission stated that it has become aware of several illegal sports wagering operations in the state. The letter alleges that despite operators calling themselves “fantasy” sports, they accepted wagers on player propositions or pools. According to the KRGC, accepting wagers on player propositions or pools is only allowed if the wagers are placed on a licensed Kansas Lottery gaming facility manager or by their associated interactive sports wagering platforms.
Here is more on Kansas daily fantasy sports.
Kansas Racing Gaming Commission Investigates State Fantasy Platforms
The Commission launched an investigation to determine the best course of action, only to send cease and desist letters to each platform that it found violating regulations. Meanwhile, the original letter alluded to sending out 10 cease and desist letters. Eventually, only six fantasy apps were asked to leave the state.
The move places Kansas on par with New York and Florida, both states that have cracked down on pick’em games in the past. While the KRGC did not identify the other companies named in the cease and desist letters, other operators in the past, like PrizePicks, have faced scrutiny in New York, Florida, and Michigan.
Each state has provided similar reasoning for the crackdown, stating that the platforms operated similarly to sportsbooks, with a player vs. house format and for positioning Over/Under fantasy games like player prop parlays. Unlike New York and other states, no separate licensing procedure is required for fantasy companies to obtain licenses from the state.
Underdog Fantasy Exits Kansas
Underdog Fantasy removed all pick’em games for Kansas players last November. However, the platform continues to offer traditional peer-to-peer fantasy in the same region. On the other hand, PrizePicks continues to operate in Kansas. It recently agreed to pay New York $15 million for operating without a valid license for over three years. Underdog will stop offering pick’em fantasy games in New York as part of the same settlement.
Regulation of fantasy games in Kansas is currently nebulous, with no clear consensus on who regulates the fantasy sports industry in the state. According to a 2015 law, fantasy contests are exempted from state criminal statutes and also exclude them from being defined as a ‘bet.’
According to the same law, which was written much before the creation of pick’em contests, “prizes and awards must be established beforehand, and their value must not be determined by the number of participants or their total entry fees paid.”
The law also states that winning outcomes must be reflective of the relative knowledge and skill of the contestants, while their value must not be determined by the number of participants or the amount of entry fees paid. The law emphasized the individual statistical performance of an athlete across multiple sporting events. The same law makes it clear that winning outcomes should be held separate from the score, point spread, or performance of multiple teams.
Kansas Regulatory Framework Still Incomplete
Despite Kansas sports betting launching in Sept. 2022, the law still needs to be made clearer on the legality of fantasy contests. Mobile wagering has been legal in the state since Gov. Laura Kelly signed Bill SB 84, which legalized online and retail wagering in the state. The bill was signed in May 2022 and went into effect in July of the same year, making it one of the quickest turnarounds across all states.
The downside of such a quick turnaround is that many gaps continue to exist in the state’s framework for licensed betting and other games of chance. In Dec. 2023, the state earned $259.6 million in wagers for the month, marking a jump in revenue despite an unchanged handle from the previous term.
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