DraftKings has announced it will launch pick’em style contests in six US states that will likely skirt the legal issues other companies have faced in their own contests of the same nature.
What’s It All About?
The new daily fantasy sports contest by Boston-based DraftKings has gone live in the following six states: Maryland, Minnesota, Oklahoma, South Carolina, Tennessee, and Wisconsin. All of those states have one thing in common – they don’t allow sports betting or online casino gambling.
The Pick6 game being offered has nothing to do with the football term, pick-six, which applies to an intercepted pass being run back by the defender for a touchdown. But what it does allow its participants to do is enter contests in which they choose at least two, and no more than six, players’ statistics for an individual game to go over or under a specified total.
Customers will be able to build lineups in which they choose, for example, whether Dolphins’ receiver, Tyreek Hill, will have over or under 112 receiving yards, and then choose whether Titans’ running back Derrick Henry will have over or under 83 rushing yards.
They can continue to add to what is usually defined in the sports betting parlance as prop bets to their sheet. The more players involved in the contest would ostensibly boost the possible winnings.
As of this moment, there are no plans to expand the Pick6 product to include athletes in any sport other than the NFL and NBA.
Is It Sports Betting?
This product is not unique as it has been offered by several other daily fantasy sports (DFS) companies but has been met with increased scrutiny, with some states issuing cease-and-desist letters because the product crosses the line from DFS to sports betting.
As many know, sports betting proposition bets, or props, act in the same way where a customer is allowed to bet over or under a designated total on a player’s statistical output for a given game. The difference, DFS operators claim, is that their pick’em style games make their customers bet at least two athletes which would then form a parlay which is another sports betting offering.
The issue is that parlays are the province of sports betting companies, not DFS operators which is why companies like Underdog, Betr, and PrizePicks have come under fire from state attorneys.
A parlay will render specific odds which increase depending on the number of “legs” in the parlay.
However, DraftKings is going about it differently and instead of acting as the house, where if the player loses the house reaps the money risked, it will act as a pari-mutuel system the same way horse tracks do where the money is put in a pool and the track takes a percentage of the combined amount of money risked and does not benefit if more people lose.
DraftKings’ revenue will be determined solely on the total amount of money in the pool of these Pick6 contests in an identical way to the pari-mutuel style betting on horse races.
However, the strategy behind DK’s recent product offering is innovative and prescient in that it will acquire customers in states that have not legalized sports betting. But if that status changes in the future, DraftKings will have a list of those customers to immediately contact and hopefully acquire them as early adopters to its more lucrative sports betting arm.