State sends cease and desist letters to 2 sports betting operators

Online operators violate state’s gambling laws, agency says

FILE — The state Capitol is shown in this undated file photo.
FILE — The state Capitol is shown in this undated file photo.


The Arkansas Department of Finance and Administration sent cease and desist letters to two Daily Fantasy Sports operators that the finance department believes to be offering unlicensed sports betting in violation of Amendment 100 to the Arkansas Constitution, the department said Thursday.

The cease and desist letters dated Thursday were sent via certified mail to Underdog Sports Holdings of Brooklyn, N.Y., and SidePrize LLC (PrizePicks) of Atlanta, the state Department of Finance and Administration said.

Neither company could be reached for comment Thursday.

Daily Fantasy Sports operators offer a version of the traditional fantasy football concept, with a consumer creating a team and points being assigned based on performance, the finance department said, and the consumer creating the best performing team is rewarded. Over the past year, these operators have offered a product associated with sports betting, "player prop bets," according to the finance department.

"Back in the day, places that tolerated illegal gambling were referred to as 'wide open,'" finance department Regulatory Division Administrator Trent Minner said in a news release.

"The Internet is today's equivalent of a 'wide open town' where unlicensed gambling thrives outside of the taxation and age-verification requirements required by the law," he said. "As the state's regulator of licensed sports betting, [the state Department of Finance and Administration] is putting these companies on notice that Arkansas is not 'wide open.'"

Traditional Daily Fantasy Sports websites operate legally under the protection of Act 1075 enacted during the General Assembly's regular session in 2017, according to the finance department. However, Arkansas law does not allow these operators to offer unlicensed sports betting. These unlicensed operators are not required to verify a participant is 21 years of age and they do not pay taxes associated with sports betting.

"Arkansas law requires sports bets to be placed with a licensed sportsbook that is required to verify the age of the consumer. The state has an interest in protecting Arkansas children from operators seeking to exploit underage Arkansans," finance department Secretary Jim Hudson said.

Asked whether the finance department received complaints from any of the state's casinos about the Daily Fantasy Sports operators, Minner said in a written statement that "I don't want to speak for Arkansas's three casinos, but anyone in the gaming world has been following this issue closely the last year or so.

"Daily Fantasy Sports operators' pivot to unlicensed sports betting has been covered across the country," he said. "ESPN.com published a story covering PrizePicks' settlement with the New York State Gaming Commission as recently as Tuesday."

Finance department spokesman Scott Hardin said "we did receive feedback from casinos on this issue."

According to ESPN.com, PrizePicks, a prominent daily fantasy sports operator, has agreed to cease its for-money contests in New York and pay nearly $15 million to the state's gaming commission for operating without a license, according to a stipulation of settlement document obtained by ESPN.

The document, signed by representatives of PrizePicks and the New York State Gaming Commission, shows the fantasy site was in violation of New York law for several years. The amount of the settlement is "based on the revenue PrizePicks generated through purported [interactive fantasy sports] contests from New York contestants" from June 4, 2019, through Dec. 19, 2023, and includes a penalty based on the number of days the purported contests were offered, according to the document.

Amendment 100 to the Arkansas Constitution, approved by voters in November 2018, authorized what is now called Southland Casino Racing in West Memphis and Oaklawn Racing Casino Resort in Hot Springs to expand into full-fledged casinos. The amendment also allows the Racing Commission to license a casino apiece in Jefferson and Pope counties. The constitutional amendment also authorized sports betting at the casinos.

In June 2019, the commission awarded the Jefferson County license to Oklahoma-based Downstream Development Authority of the Quapaw Nation. The commission subsequently voted to transfer the license to Saracen Development LLC.

The Pope County casino license has been a source of turmoil for the county and the state, resulting in numerous court cases. Billions of dollars are collectively wagered at the state's casinos each year.

On Jan. 30, the Arkansas Racing Commission formally authorized a proposed revision of its casino gaming rules and will consider the proposal after a 30-day public comment period that started Feb. 7.

After the Legislative Council reviews the commission's revised casino gaming rules, the commission will need to approve a new application for the Pope County casino license and a new scoring matrix for the applications, and set the dates for the 30-day application period, a representative of the attorney general's office told the commission last month.

After the application period ends, the commission will review and score applications for the casino license


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