Maryland Regulators Pick Away at Latest Fantasy Offerings

By: Robert Ward

On August 29, just as football fans were gearing up for the 2024-2025 NFL season, the Maryland State Lottery and Gaming Control Agency issued a new round of proposed regulations for both sports betting and daily fantasy sports. The proposed sports betting regulations address a wide range of topics, from geolocation and multifactor authentication to wind-down procedures for sportsbooks.[1] The proposed daily fantasy sports regulations, on the other hand, appear to further cement the agency’s longstanding opposition to pick ‘em-style fantasy sports competitions, which have drawn scrutiny from regulators across the country.[2]

Pick ‘em-style contests differ from “traditional” fantasy sports contests. In traditional fantasy sports, players compete against others by drafting a lineup of athletes, subject to a salary cap, and earning points based on the statistical performance of those athletes in real-world competitions. In pick ‘em contests, rather than drafting a whole team of athletes, players select a set of athletes and predict whether a given athlete will surpass or fall short of a particular metric. The more athletes a player selects, the bigger prize they can win.

Early iterations of pick ‘em contests drew regulatory scrutiny in part because they were single-player contests, not multiplayer or peer-to-peer like traditional fantasy sports. Maryland was among the first states to act, issuing a set of emergency regulations in 2021 targeting single-player pick ‘em contests. The emergency regulations incorporated portions of the statutory definition of “fantasy competition” and specifically defined fantasy competitions as those in which players compete against other players, not the operator.[3] Fantasy operators that had previously offered single-player pick ‘em contests in Maryland left the state, and the emergency regulations became permanent in 2022.[4]

The emphasis on the peer-to-peer nature of fantasy competitions in the 2021 regulations suggested that Maryland regulators might have been focused on contests in which players were essentially competing against the fantasy sports operator, rather than other players. Regulators in other jurisdictions have emphasized this point as well. In Colorado, for example, recently adopted rules define “fantasy contests” as “contests where patrons compete against other patrons” and specifically prohibit contests where “patrons compete against fantasy contest providers.”[5] Earlier this year, the Massachusetts Attorney General’s Office issued cease-and-desist letters to multiple operators offering single-player contests, while permitting peer-to-peer contests to continue.

Maryland’s proposed regulations, on the other hand, would strengthen the state’s existing opposition to pick ‘em-style contests, whether single-player or peer-to-peer.[6] In doing so, Maryland may be set to join other jurisdictions that have adopted or proposed rules that some view as expressly prohibiting pick ‘em contests regardless of whether they are single-player or not, including New York[7] and Michigan.[8]

The proposed regulations are perhaps unsurprising in light of Maryland regulator’s December 2023 action against DraftKings’ peer-to-peer pick ‘em offering, Pick6.[9] Nevertheless, coupled with the regulatory and enforcement actions in other jurisdictions, they suggest that pick ‘em contests—and other “non-traditional” daily fantasy contests—will continue to attract attention of regulators on the lookout for what they perceive as sports betting disguised as a fantasy contest.  As the industry continues to evolve, and fantasy operators continue to innovate, regulators will likely keep a close eye on these developments.[10]

Whether pick ‘em contests merit substantial additional regulatory scrutiny or not, Maryland’s proposed regulations suggest that the controversy over where fantasy sports end and sports betting begins is unlikely to go away any time soon.

[1] See Prop. Md. Code. Regs. 36.10 available at https://www.mdgaming.com/wp-content/uploads/2024/08/COMAR-36.10-Proposed-Changes.pdf.

[2] See Prop. Md. Code. Regs. 36.09.01.02 (Aug. 29, 2024), available at https://www.mdgaming.com/wp-content/uploads/2024/08/COMAR-36.09-Proposed-Changes.pdf.

[3] See Md. Code. Regs. 36.09.01.02(B)(3).

[4] See Md. Reg., Emergency Action on Regulations, available at https://mgaleg.maryland.gov/pubs/committee/AELR/21-225E-Regulation.pdf.

[5] Code Colo. Regs. § 207-3:1.3(2)

[6] Prop. Md. Code Regs. 36.09.01.02(B)(3)(b) (Aug. 29, 2024).

[7] 9 N.Y. Comp. Codes R. & Regs. § 5602.1(a)(4).

[8] Mich. Admin. Code R. 432.531(3)(b).

[9] Bennett Conlin, DraftKings Can No Longer Offer Pick6 Fantasy Game in Maryland, SportsHandle, (Dec. 21, 2023), https://sportshandle.com/draftkings-pick6-game-leaves-maryland/.

[10] The proposed regulations also provide for enhanced monitoring of fantasy competitions to ensure that they comply with statutory and regulatory requirements.  See Prop. Md. Code Regs. 36.09.02.02, 03. They would also give the agency authority to suspend or terminate an operator’s registration for failing to comply with certain statutory provisions or the regulations. See Prop. Md. Code Regs. 36.09.02.06.