Illinois gambling regulators target PrizePicks, renewing daily fantasy sports debate
The daily fantasy sports debate is back in Illinois.
Nearly a decade after Illinois officials tried — and failed — to clamp down on the popular sports lineup-building contests that some critics decry as illegal gambling, state regulators set their sights last month on one of the most popular apps operating in a long-standing legal gray area.
The Illinois Gaming Board sent a cease-and-desist letter to PrizePicks just days ahead of the Super Bowl, declaring that some of the Atlanta-based company’s daily fantasy contests “constitute illegal gambling in violation of Illinois law” and could draw fines. Illinois Attorney General Kwame Raoul also urged them "to cease unlicensed sports betting."
The scathing letter was in a batch of legal actions sent out to 11 gaming companies, a list that lumped in PrizePicks and other daily fantasy sites with Bovada, an offshore sportsbook that has taken bets in flagrant violation of state and federal law for years, officials say.
PrizePicks says it no longer offers the contests that had regulators blowing the whistle in Illinois.
But with the arrival of March Madness and the annual glut of gambling it attracts, the company is still poised to cash in with other offerings on a platform that strongly resembles sports betting — part of the booming daily fantasy market that Illinois legislators have yet to tax or regulate.
In traditional fantasy sports leagues, fans compete against each other as “team owners,” selecting professional or college athletes whose real-life stats over the course of a full season determine the league’s winner. It’s usually just for bragging rights or a pooled jackpot among friends, coworkers or fellow fans.
Companies started making regulators’ heads spin in the mid-2000s with the advent of daily fantasy sports contests, in which customers can assemble numerous rosters on their phone to square off with strangers for cash stakes, based on real-life player performances in a single day.
Former Illinois Attorney General Lisa Madigan issued a 2016 decision arguing that was enough to meet the definition of illegal gambling, over the objections of companies like FanDuel and DraftKings — which nevertheless kept operating in the state. They and other companies argue their contests are games of skill, not chance.
But those two giant corporations aren’t facing the wrath of Illinois authorities this time around, because now they have costly sports betting licenses following the 2019 legalization of sports betting.
In the past year alone, DraftKings and FanDuel have raked in nearly $383 million and $461 million, respectively, from Illinois sports bettors, according to Gaming Board records. And that’s not counting their massive daily fantasy operations, since that end of their business still isn’t regulated.
But they also pay hefty gaming taxes to the state — more than $100 million apiece in the last year — unlike companies such as PrizePicks, which touts itself as the largest daily fantasy sports operator in the United States.
Shortly after legal sports betting launched in Illinois, the Illinois Supreme Court deemed fantasy contests legal in a 2020 decision that ruled them “predominately skill based."
But the Gaming Board and Raoul's office say the so-called “single-player contests” — in which customers are essentially playing against the house — that had been offered by PrizePicks fall short of the state Supreme Court's standard. The company now only offers “peer-to-peer” contests in Illinois, a PrizePicks spokesman said.
Their platform invites customers to select players and then predict whether each one goes over or under a certain statistical threshold on a given night; a Bulls player scoring more than 10 points, for example.
Brian W., an avid NBA fan from the south suburbs, told the Sun-Times in a message that he plays a few dollars on PrizePicks once or twice a week and doesn’t see much difference from traditional parlay betting. “I think of it like buying a sports lottery ticket,” he wrote.
Marc Edelman, a law professor at Baruch College's Zicklin School of Business who specializes in fantasy sports law, said customers are taking a risk when playing games offered by unregulated companies.
“The very real concern about against-the-house games is that companies that aren’t adequately funded and perform poorly might end up without the money to pay winners,” Edelman said.
State Rep. Terra Costa Howard, D-Lombard, and State Sen. Lakesia Collins, D-Chicago, have introduced legislation in Springfield that would license and tax daily fantasy companies up to 15% of their gross revenue.
A PrizePicks spokesman said company leaders “are encouraged that legislators are considering a bill this session to clarify fantasy sports law and implement the taxes and regulations we’ve long advocated for, ensuring a fair and transparent framework for all operators.”