North Carolina Targets Sports Betting-Like Fantasy Contests with First Batch of Rules

If pick ‘ems are not fantasy under North Carolina’s regulations, they could be considered sports betting by the state, and that would require operators to seek a license to offer the contests.

Oct 17, 2023 • 18:22 ET • 2 min read
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The first round of rules proposed for sports betting sites in the Tar Heel State includes a shot across the bow of companies offering pick ‘em fantasy contests in North Carolina. 

Members of the legal sports betting committee of the North Carolina State Lottery Commission voted Tuesday to begin the rulemaking process for the first set of regulations for mobile operators and horse-race wagering. 

In the first package of proposed rules is a definition of “fantasy contests” that, at first blush at least, does not appear to include pick ‘em-style contests. Those contests involve users choosing two or more outcomes, such as a player going over a certain point total, to try to win a payout from the house. 

Can I get the definition?

The proposed North Carolina sports betting regulations state that fantasy contests are not “based on proposition wagering or contests that involve, result in, or have the effect of mimicking proposition wagering or other forms of Sports Wagering.”

They also say that fantasy contests are not games “in which an Individual chooses, directly or indirectly, whether individuals or a single real-world team will surpass an identified statistical achievement, such as points scored.”

The full definition is below. However, it looks like a shot against pick ‘ems in North Carolina, where some operators already offer those contests.

North Carolina’s sports betting law states that it does not apply “to fantasy or simulated games or contests in which one or more fantasy contest players compete and winning outcomes reflect the relative knowledge and skill of the fantasy contest players and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events.” 

However, if pick ‘ems are not fantasy under North Carolina’s regulations, they could be considered sports betting by the state, and the law would apply. It is illegal under the sports betting law to offer or accept wagers without a valid license, so pick 'em providers could then have to seek a permit to offer the contests.

A spokesperson for the Coalition for Fantasy Sports, backed by PrizePicks, Sleeper, and Underdog Fantasy, said the North Carolina legislature "ensured" their contests could continue to be offered as fantasy sports when the sports-betting bill passed earlier this year.

"We are confident that the Lottery Commission will reach common sense rules that reflect the letter and spirit of that bill," Allison Harris said. "We look forward to participating as stakeholders in the rulemaking process, just as we worked alongside with legislators this past session to protect the fantasy sports that North Carolinians have played for years."

Fantasy fight

North Carolina’s first batch of sports betting rules are now out for public comment and will be the focus of an upcoming hearing. Regulators could approve them, with or without amendments, after receiving feedback.

Nevertheless, the proposed rules are the latest in a recent crackdown on pick ‘ems by U.S. regulators. States such as Florida and Ohio have taken steps to deter operators from offering that form of fantasy, but companies such as Underdog have argued their products are legal and claim they are being targeted by rivals like DraftKings and FanDuel

The chief executives of both DraftKings and FanDuel spoke last week at the G2E conference in Las Vegas and argued states should take the lead in the pick 'em-sports betting debate

“There's a legal and regulatory framework and I think it's up to the states to adjudicate this,” FanDuel CEO Amy Howe said. “I think they will decide whether those offerings are within the legal framework. And there's a clear distinction between games of skill and games of luck.”

The proposal

Here is the definition of fantasy contests in the rules proposed by North Carolina regulators:

“Fantasy contests” means fantasy or simulated games or contests in which one or more fantasy contest players compete and winning outcomes reflect the relative knowledge and skill of the fantasy contest players and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events. Fantasy contests do not include any of the following contests:

(a) based on proposition wagering or contests that involve, result in, or have the effect of mimicking proposition wagering or other forms of Sports Wagering;

(b) in which an Individual chooses, directly or indirectly, whether individuals or a single real-world team will surpass an identified statistical achievement, such as points scored;

(c) in which an Individual submits a fantasy contest team which does not involve the knowledge, skill, input, or control of such person;

(d) in which an Individual submits a fantasy contest team composed of:

(i) a single individual;

(ii) the entire roster of a real-world team; or

(iii) solely individuals who are members of the same real-world team; or

(e) in which an Individual fantasy Player does not compete against at least one other Individual fantasy Player.

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