Protections Made For Beginner Michigan Daily Fantasy Sports Players Under Proposed Rules

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For the first time ever, Michigan sports enthusiasts will now have the opportunity to place online bets on NFL games throughout the entire season. As a result, the popularity of daily fantasy sports, which was once a novelty for fans, is likely to be slightly diminished.

However, a significant number of players in Michigan continue to participate in daily fantasy sports during the NFL season by creating a lineup on DraftKings or FanDuel on Sunday morning for the afternoon’s NFL games.

Discussions regarding player protections are currently underway in Lansing as the rulemaking process progresses for fantasy contests. These discussions are a result of the state laws implemented in December 2019, which not only permitted regulated online sports betting and internet gaming but also opened up the need for player safeguards.

Latest on Michigan laws, rulemaking process for fantasy contests

On December 19, 2019, Governor Gretchen Whitmer gave her approval to Act No. 157, which is included in the set of laws governing sports betting and online casinos.

While the regulations are being finalized, the Fantasy Contests Consumer Protection Act grants legal permission to fantasy contest operators for hosting games.

Similar to sports betting and internet gaming, regulations need to be developed by state regulators and approved by a legislative committee in Lansing, in addition to Act No. 157.

Until this week, stakeholders were given the opportunity to provide input on the drafts of rules, which spanned 52 pages, by the Michigan Gaming Control Board.

Among other steps, the remaining process should encompass the completion of a Regulatory Impact Statement, a public hearing, and the approval of the legislative Joint Committee of Administrative Rules.

Rules, act provide protection from DFS data sharks

During the initial stages of daily fantasy sports, the presence of sharks deterred numerous casual players. These individuals employed automated computer scripts to enter numerous lineups, ultimately claiming a significant portion of the winnings and diminishing the enjoyment of DFS.

Nevertheless, the legislation establishes safeguards to prevent exploitation of individuals classified as “highly experienced players” according to the act.

Players fall into this category only after they have participated in 1,000 unique contests or have won more than three prizes with a value of $1,000 or higher.

The operator needs to display a symbol indicating the status of this player for everyone else to observe, and operators are required to organize novice competitions that are off-limits to these players.

The regulations also outline the individuals who are not eligible to participate. Prohibited players encompass those who are associated with the league in the competition, such as coaches, players, managers, and officials.

Furthermore, the participation of any person who possesses the power or capacity to impact the performance of an athlete in a sporting event, or who possesses undisclosed, exclusive information regarding an athlete or sporting event, is prohibited.

You can’t pick all Detroit Lions for your daily fantasy team

There is another intriguing aspect mentioned in the draft fantasy contest rules: It is not permitted for a fantasy contest player to form a team that consists of all the players from a real-world sports team. Additionally, it is also not allowed for a team to be comprised solely of athletes belonging to the same real-world sports team.

Unfortunately, you won’t be able to form your team entirely with the Detroit Lions roster. Your grandiose dreams of having a team filled with Lions players are now shattered (with a touch of humor).

To maintain the distinction between regulated Michigan sports betting, which went live online on Jan. 22, and daily fantasy, several safeguards have been implemented.

Auto-draft functionality is not available for daily fantasy sports, although it is permitted in season-long fantasy draft contests.

Furthermore, individuals aged 18 and above have the opportunity to engage in daily fantasy sports in Michigan. This contrast with sports betting, as it mandates a minimum age of 21.

An initial license requires operators to pay a fee of $10,000, followed by an annual fee of $5,000 for license renewal.

DFS players benefit from the convenience of shared wallets provided by DraftKings and FanDuel, which seamlessly integrate their online casino and sports betting options.

Eight fantasy contest operators are MI taxpayers

After the implementation of the law in 2019, fantasy contest operators were obligated to pay taxes to the state of Michigan. Meanwhile, companies were allowed to carry on offering fantasy contests until they received a license approval or denial.

The contests will be considered legal if companies submit their license applications within 60 days of the availability of the applications. The applications will be made available by the MGCB once the rules have been finalized.

In the year 2020, a total of eight operators contributed 8.4% of their reported adjusted revenue as taxes to the state. These operators included:

• The sound of an explosion followed by a burst of energy
• DraftKings
• FanDuel
• The Championship of Fantasy Football Players
• Shark of Fantasy Sports
• FullTime
• SportsHub
• Yahoo!

DraftKings, FanDuel lead Michigan DFS operators

Fantasy contest operators disclosed a revenue of $16.7 million to the state in 2020, while also contributing $1.4 million in state taxes.

In terms of market share, DraftKings dominated with $9.7 million in revenue, accounting for a significant 58.2%. FanDuel, on the other hand, earned $6.3 million, which represented a 37.9% market share. The remaining companies collectively generated $653,574 in revenue, making up a modest 3.9% market share.

As of 2021, fantasy contest operators have generated $7.0 million in revenue and contributed $586,938 in state taxes through May. This amount is expected to increase further with the upcoming football season, which is anticipated to be a major source of annual revenue.

In terms of revenue, DraftKings emerged as the leader with $3.8 million, capturing a commanding market share of 54.5%. On the other hand, FanDuel generated $2.9 million in revenue, accounting for a share of 41.2%.

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