Florida regulators crack down on daily fantasy sports with cease-and-desist letters sent to three operators

The Florida Gaming Control Commission has sent cease-and-desist letters to three daily fantasy sports operators, accusing them of offering potentially illegal mobile betting games. Regulators have also threatened legal action if the sites don’t immediately stop.

The three companies in question are Underdog Sports, LLC (based in Brooklyn, New York), SidePrize LLC, also known as Performance Predictions LLC, operating as PrizePicks (based in Atlanta), and Betr Holdings, Inc. (based in Miami), The News Service of Florida reported.

The cease-and-desist letters instruct the companies to stop accepting bets or wagers from residents of the state of Florida and to refrain from promoting or conducting illegal lotteries. Additionally, the letters prohibit these companies from offering cash or other prizes to entice Florida residents into participating in illicit bets or wagers on their platforms.

This crackdown also appears to encompass season-long fantasy sports games, a move that coincides with the commencement of the football season. In fantasy sports, participants draft rosters of real-life athletes, with the outcome of fantasy games determined by the statistical performance of these athletes over the course of a season.

Of particular concern to the Commission is the "parlay-prop-style" games offered by these companies, which bear similarities to sports-betting games, an activity prohibited in Florida. Commission Executive Director Lou Trombetta asserts that these companies have crossed the line into sports betting, which is a violation of state regulations.

“Under Florida law, betting or wagering on the result of contests of skill, such as sports betting, including fantasy sports betting, is strictly prohibited and constitutes a felony offense unless such activity is otherwise exempted by statute,” Trombetta’s letter said, as per the report.

“Accordingly, in Florida, sports betting may be lawfully conducted only pursuant to a gaming compact. … Further, receiving such illegal bets and wagers and aiding or abetting such criminal activities constitute separate felony offenses. … Lotteries are also strictly prohibited in Florida.”

Notably, the cease-and-desist letters did not extend to industry giants DraftKing and FanDuel, which have dominated the fantasy sports market since their online launch a decade ago, the report said. It remains unclear whether the Commission intends to take action against other operators in the future, as correspondence suggests the possibility of a broader crackdown.

Legal battles over gambling in Florida have been ongoing, particularly in light of a 2021 compact negotiated between the state and the Seminole Tribe. This agreement granted the tribe control over sports betting within the state. While the compact permits other operators to run fantasy sports contests, it outlines exclusive sports betting rights for the Seminoles, with a "hub and spoke" plan allowing gamblers across Florida to place online bets facilitated through servers located on tribal lands.

Owners of West Flagler Associates and Fort Myers Corp., doing business as Bonita Springs Poker Room in Southwest Florida, filed a lawsuit challenging the compact. The parties argued the agreement violated federal law and would cause a “significant and potentially devastating impact” on their operations. The pari-mutuel owners on Monday filed a motion saying they would ask the U.S. Supreme Court to weigh in following adverse rulings.

As the legal landscape evolves, the fate of daily fantasy sports operators in Florida remains uncertain. State lawmakers have grappled with establishing regulatory oversight for the fantasy sports industry in the past, with proponents contending that these contests involve skill rather than chance and are thus compliant with state gambling laws.