Underdog Fantasy will leave the state of New York after reaching a settlement with the New York State Gaming Commission (NYSGC).
The settlement concerns operating unpermitted interactive fantasy sports (IFS) contests within the state. It centers on Underdog’s acquisition of Synkt Games in December 2022. At the time of acquisition, Synkt held a temporary interactive sports permit.
Underdog continued to operate contests under Synkt’s permit after its acquisition. Still, the New York State Gaming Commission found that some of the contests offered were not covered under the original terms of Synkt’s permit.
Regulatory Challenges Force Underdog Fantasy’s Exit from New York
The settlement reads: “Underdog Fantasy agrees to cease and desist on or before March 14, 2025, any operations and offerings in New York that Underdog Fantasy characterizes as IFS that are not expressly authorized by the Synkt temporary permit and provide proof to the Commission of such cessation and desistance.”
Although the permit allows certain types of games, Underdog will leave the state as all of its offerings are technically in breach.
Underdog’s General Counsel Nicholas Green commented: “It’s a unique, temporary license issue specific only to New York and not related to any specific format we offer.”
“Any fantasy game created after 2015, no matter the format, is not permitted under the commission’s interpretation of what games a temporary permitholder, like Underdog, can and cannot offer,” he continued.
In addition to ceasing operations, Underdog has agreed to pay the state a $17.5 million settlement and unpaid taxes under the Synkt brand.
The New York State Gaming Commission Chair, Brian O’Dwyer, commented: “This settlement is another example of the Gaming Commission looking out for the gaming public.”
“We encourage fantasy sports players to play only through permitted or registered operators that are subject to our comprehensive regulations that protect New Yorkers,” he concluded.
Underdog does not share this view. Green’s strongly worded statement read: “For nearly a decade, fantasy sports in New York has operated in regulatory uncertainty, including licensing delays limiting customers’ choices to only a couple of legacy operators.”
The regulatory juxtaposition for an established industry such as daily fantasy sports shows the challenges for crypto sportsbooks and wider gambling products. Senator Joseph Addabbo has been pushing for iGaming legalization for a number of years but with staunch resistance from responsible gambling advocates and brick-and-mortar casino operators.
Green argues: “We disagree with the Commission, but the settlement does provide clarity on New York licensing issues. The settlement recognizes that Underdog worked in cooperation with the Commission and operated at all times in a good faith interpretation of state law. We look forward to offering all of our contests again to New Yorkers, and we are working with the Commission to do so as soon as possible.”
Although Underdog will leave New York in the short term, the operator has aspirations to return. The New York regulator also emphasized that the settlement does not disqualify the company from seeking a permanent fantasy license or other form of gaming license in the state. Underdog’s permanent fantasy license in the Empire State remains pending.
Underdog Expands into New Jersey and Delaware with Pick’em Champions
In more positive news for the company, it will launch its Pick’em Champions game in both New Jersey and Delaware.
This will mark Underdog’s debut in Delaware. The DFS operator is already live in New Jersey, but this will be the first time it has offered a ‘Pick’em’ product.
“New Jersey and Delaware have been at the forefront of modern sports gaming regulation, and bringing our Pick‘em Champions game to those states is yet another endorsement from highly respected gaming regulatory bodies of the product we built, which much of the industry has now replicated,” added Green.
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