Underdog to Pay $17.5M Fine and Exit New York Market
Daily fantasy sports operator Underdog Fantasy has pulled out of the New York market.
LISTEN TO THIS ARTICLE:Underdog’s exit from the Big Apple follows a ruling from the New York State Gaming Commission (NYSGC), which found the company’s operations to be non-compliant with state law.
Underdog Fantasy has been operating in New York since December 22, 2022, offering interactive fantasy sports contests under a temporary license held by Synkt, now its subsidiary.
State law mandates that temporary license holders maintain the same DFS games offered at the time of license issuance. This means Underdog would have had to offer the same DFS titles Synkt Games had in 2015.
However, the NYSGC found that Underdog had changed its games and imposed a $17.5 million fine on the company. According to the commission, the penalty is calculated based on the revenue Underdog had generated from its popular games in the New York market.
In its response, Underdog expressed disagreement with the commission’s interpretation of the relevant law. However, the company has chosen to resolve the matter by withdrawing all its DFS contests from the state and paying the fine.
Underdog will clear the debt in 12 installments, starting April 1, 2025, and ending January 1, 2028.
It’s a unique, temporary license issue specific only to New York, and not related to any specific game format we offer. Any fantasy game created after 2015, no matter the format, is not permitted under the commission’s interpretation of what games a temporary permitholder, like Underdog, can and cannot offer. The high fine amount speaks to the popularity of our games, as the settlement was calculated based on our revenue in New York.
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Underdog to be Considered for Permanent License
In the settlement agreement, the NYSGC acknowledged that Underdog operated in good faith and had cooperated with the investigation. As such, the company is eligible for consideration for a permanent license.
However, going forward, Synkt must file tax returns with the NYSGC and pay taxes, as adherence to this requirement will be considered in future permanent license applications.
Underdog has applied for a permanent license, indicating that its departure from the state is temporary.
Meanwhile, Underdog has announced plans to expand its DFS offerings into New Jersey and Delaware later this month. The company now offers pick-em style games in 36 states and online sports betting in North Carolina.
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