PrizePicks has recently faced criticism as a sportsbook disguised as a Daily Fantasy Sports (DFS) platform. Earlier this week, PrizePicks was ordered to cease and desist in Wyoming. The company is prohibited in legalized betting states Ohio and New Jersey and could face the same judgment in other legalized betting states it already operates in, including Arizona.
Licensing requirements and application fees for DFS sites are much different than what Arizona requires for sports betting licensure, and it’s advantageous for a DFS company to be licensed as a DFS site rather than a sports betting company.
What Is PrizePicks?
PrizePicks is a Daily Fantasy Sports (DFS) app and website that allows users to compete for cash prizes by predicting the individual results of a player’s performance.
According to the PrizePicks website, the app is legal to use in 31 states, including the District of Columbia and Canada. PrizePicks has been operating in Arizona since 2021 and is the top DFS app in the Grand Canyon State, accepting $3.6 million in in-state entry fees during May of 2023.
PrizePicks Issued Cease and Desist Order in Wyoming
PrizePicks has recently come under fire by several jurisdictions. The Wyoming Gaming Commission informed PrizePicks and Underdog Sports that their DFS platforms offered “unlicensed betting.” Wyoming regulators informed the companies;
“The Wyoming Gaming Commission became aware that your business offers gambling on sporting events to Wyoming residents,” both letters read, “Specifically, your business purports to offer fantasy sports contests but, in reality, the offering appears to fall under the exact definition of “sports wagering” as defined in Wyo. Stat. Ann. § 9-24-101(a)(xii). This offering may violate Wyoming’s gambling laws found inWyo. Stat. Ann. §§ 6-7-101 through -104, §§ 9-24-101 through -106, and Wyoming Gaming Commission’s Online Sports Wagering Rules, Chapters 1 through -9.”
Defining the Terms
For those of you new to DFS and sports betting, we’ll share some simple definitions so you can understand why PrizePicks is currently under fire in several states.
What is Daily Fantasy Sports?
Daily Fantasy Sports (DFS) are contests based on the popular seasonal game millions worldwide enjoy. The DFS owner drafts his team from a preselected pool of real-life athletes and competes against other daily fantasy sports owners in contests ranging from head-to-head competition to tournaments with over 100,000 entries or more.
Points are awarded based on how each professional or college player performs during their contests. The winner is the DFS owner whose team scores the most points, and the app usually accepts a 10% rake for hosting the tournament. Payouts are predetermined based on the number of entries received.
What is Sports Betting?
Sports betting in Arizona is a type of gambling where a bettor predicts the outcome of a game with the express purpose of winning money from a bookmaker. Winnings are determined by odds or prices hung by the bookmaker, and unlike DFS, the payment comes directly from the bookmaker, and the bookie keeps all of the Arizonan’s losses.
What are Prop Bets?
A proposition, or prop bet, is a wager that isn’t tied to the outcome of a game. Prop bets can either be an individual or team-based event in a game instead of focusing on the outcome of the sporting event or competition.
Usually, prop bets are listed as Over or Under propositions with the bookmaker’s number a bettor would then choose whether the play will finish Over or Under the number on the board. Payouts are determined by the odds denoted in either (-) for the favorite and (+) for the underdog.
What PrizePicks Offer
The PrizePicks website offers a wide range of DFS markets similar to the ones found on every legal Arizona bookmakers app. PrizePicks differs from the bookmakers in what they’ve named the market and how the payout is calculated.
For example, bookmakers use terms like Over and Under for their prop bets, but PrizePicks uses the terms “More” or “Less”. Instead of expressing its betting odds with a (+) or (-), PrizePicks has a payout table for both their “Flex Play” and “Power Play” DFS games.
Unlike most DFS sites, PrizePicks doesn’t take a “rake” but earns its money from the customers’ losses and pays the winner from their own bank, just like the legal bookies do.
Flex Play allows players with four correct picks out of six selections to still win, with the payout four times the initial stake amount, or 4-1 (+400) at the sportsbook.
Power Plays are markets where each of the selections on the card must land or you lose your entry fee. A six player winning Power Play entry pays out 25 times (25-1) the original stake, which would be +2500 at the sportsbook.
Legal sportsbooks offer the same markets as PrizePicks “Power Plays” except the sportsbooks call these wagers parlays.
While PrizePicks offers a catalog and payout structure that is similar to that of the licensed sportsbooks, PrizePicks is still open for business in the Grand Canyon State.
The Arizona Department of Gaming (ADG) has yet to make a decision but has stated the ADG is “reviewing the matter” without a timetable for a ruling.
That ruling could come sooner rather than later. FanDuel Head of State Government Relations, Cesar Fernadez, has publicly criticized PrizePicks and others for running an illegal bookmaking operation disguised as a DFS operator, and it’s only a matter of time before the other Arizona sportsbooks force the ADG into making a ruling sooner rather than later.