With the upcoming 2022 NFL season on the horizon, residents of Michigan might observe a modification in their fantasy sports experience.
Starting from Friday, July 1 during the Independence Day weekend, the implementation of fresh legislation and regulations for fantasy sports has been observed. As a result of these new requirements, certain companies have chosen to withdraw from the state, while others have had to modify their services.
What significance does it hold for passionate Daily Fantasy players in Michigan?
New fantasy sports licensing required in Michigan
The Michigan Gaming Control Board mandated that operators meeting the criteria of a fantasy contest operator in Michigan by May 1, 2018 must obtain a license by July 1, 2022, in order to maintain their ability to offer fantasy contests within the state.
Henry Williams, the executive director of MGCB, emphasized the significance of licensing as a crucial measure in meeting the obligations set forth by Michigan’s Fantasy Contests Consumer Protection Act. He encouraged operators to promptly submit their applications for licensing, ensuring that existing operators can continue their participation and new operators can join once the Michigan Legislature has approved the rules.
On April 27, the Michigan Legislature received the fantasy contest draft rules proposed by the MGCB for their review.
Michigan’s regulatory environment has been commended by the Fantasy Sports & Gaming Association.
According to Peter Schoenke, a board member of FSGA, companies that were not already operating in the state prior to the passing of the law are required to leave and then submit a new application. Michigan is considered a state with favorable regulations that accommodate operators of various sizes. As far as the FSGA is concerned, Michigan does not have any significant concerns or problems.
Underdog Fantasy, Yahoo forced to make changes
Underdog Fantasy, a DFS operator, recently withdrew its product from Michigan due to the newly implemented regulations.
Underdog Fantasy informed LegalSportsReport.com that, regrettably, they have ceased operations in MI temporarily due to regulation changes. They are currently exploring possibilities to resume their services in the state, although no specific timeline has been determined at this time.
Since it was established in 2020, Underdog Fantasy did not meet the requirements for the grandfathered registration granted to companies that were established before May 2018.
Yahoo, one of the companies that has been grandfathered, recently informed its users via email that it will cease providing paid fantasy contests to players in Michigan. This includes Daily Fantasy, Best Ball, Matchup Challenges, and Prize Leagues.
Players from MI who participated in a paid contest before July 1 are allowed to finish their contest or league. However, new entries or deposits are not allowed.
Yahoo has expressed its desire to reintroduce these playing options in the future.
How fantasy sports licensing is issued
Two types of licenses may be issued by the MGCB.
To conduct or provide fantasy contests for play, one must possess an operator license. On the other hand, a management company license is responsible for overseeing the day-to-day operations of fantasy contests for an operator.
In order to safeguard the public and maintain the integrity of contests, Michigan mandates the submission of commercially reasonable procedures and internal controls. Additionally, key personnel must meet the qualifications set by the MGCB.
According to state law, a fantasy contest is described as a simulated game or contest that requires an entry fee and fulfills specific criteria. However, it is prohibited to offer a fantasy contest at:
- A kiosk or machine situated within a physical retail business, bar, restaurant, or any other commercial establishment.
- A public establishment.
- A private club, association, or any membership-based organization that owns, operates, or occupies a facility.
The fee for obtaining an initial operator’s license is $10,000, with an additional annual renewal fee of $5,000. According to the draft rules of the MGCB, a management company would need to pay a $5,000 fee for obtaining an initial license and a $5,000 fee for annual renewal. In cases where the investigative costs surpass the initial or renewal fee, the MGCB reserves the right to assess these additional costs to the operators or companies.
Michigan’s Fantasy history
At the conclusion of 2019, the state implemented the Fantasy Contest Consumer Protection Act.
The MGCB includes registered operators.
- Boom Shakalaka
- DraftKings
- FanDuel
- Fantasy Sports Shark
- FFPC
- FullTime
- PrizePicks
- RealTime Fantasy Sports
- SportsHub
- Yahoo
Similar to sports betting, the state of Michigan imposes a tax rate of 8.4% on the adjusted revenues of monthly fantasy contests.
The funds collected from fantasy contest taxes are allocated to the Fantasy Contest Fund, which covers the expenses associated with regulating and enforcing fantasy contests by the MGCB (Michigan Gaming Control Board). Any surplus funds are then deposited into the Michigan School Aid Fund.
