The Terrible, Very Bad, No Good Week For Fantasy Sports Pick'Em Apps Gets Worse
The Terrible, Very Bad, No Good Week For Fantasy Sports Pick'Em Apps Gets Worse
Some of the fantasy vs. the house operators are poised to leave Florida, taking away one of their biggest markets.
About a year ago, I gave the lukewarm take that I thought a reckoning could be coming for the fantasy pick’em industry, led by the likes of PrizePicks and Underdog Fantasy.
That reckoning is now in full swing with a deluge of bad news for the industry just this week after a steady stream of bad news that started in 2023. The latest is that operators are poised to leave Florida after a new round of cease-and-desist letters, promising no legal action if apps exited the state by March 1, according to Legal Sports Report.
And that was just the latest for apps offering fantasy sports games vs. the house:
Earlier today, we learned that Arkansas sent cease and desist letters to PrizePicks and Underdog.
On Wednesday, we learned that Kansas ordered several fantasy apps to stop serving the state as “illegal sports wagering operators.”
PrizePicks exited New York after operating without a license and also paid $15 million to the state in a settlement. The state gaming commission recently enacted new rules, saying fantasy parlays were not allowed.
If we’re keeping track, there’s been bad news every day of this week for the industry. What’s in store for Friday? (I am joking. Maybe.) The industry is doing a speedrun of the same sort of pushback that DrafKings and FanDuel experienced in 2015-16.
That’s all on top of a legal climate that has increasingly become worse in the past year (see my map and breakdown here.) A majority of the states with fantasy sports laws either don’t allow fantasy vs. the house or have called its legality in question.
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The question now becomes: What’s the way forward for the industry?
Losing New York and Florida are both very bad outcomes, but perhaps not a death sentence. A pending attorney general’s opinion in California would seem to be a potential tipping point if it comes back negative for the industry. The addressable market would shrink by a sizable amount in that scenario, leaving Texas and a pool of around 20 states, most of which don't offer legal clarity for the industry. The largest sites might be able to weather that storm as diminished entities, but the dozens of other startups in this space might not. We also have to wonder how many other shoes still have to drop in other states.
The companies will continue to pivot to peer-to-peer to games, a trend that’s already underway and has more traction as a legal product. Underdog has a far more robust set of offerings on this front, but PrizePicks and others have also rolled out their own P2P games. While perhaps not as lucrative as fantasy vs. the house, it’s still an interesting product at scale. Even DraftKings has a new P2P fantasy product it recently launched.
In any event, the good times had been rolling for the fantasy parlay industry; now the industry finds itself on much less stable ground.
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