Fantasy sports operator Underdog has agreed a $17.5 million settlement with the New York State Gaming Commission for offering contests that were “not expressly permitted”.
The Commission ruled that Underdog’s interactive fantasy sports (IFS) offering in New York between July 2020 and December 2022 was outside the scope of a temporary permit issued to Synkt Games, which Underdog acquired in December 2022.
The Commission said that Synkt had never remitted taxes based on its fantasy sports offerings, despite the tax remittance required by New York’s Racing Law.
Underdog defence was that it operated in New York under a “good-faith belief” that it had the ability to do so lawfully under the temporary permit.
The company has been given 90 days to submit IFS reporting forms and remit all taxes with respect to games expressly authorized by the Synkt temporary permit, along with appropriate interest and penalties.
“All of the IFS contests offered by Synkt through December 21, 2022, as well as some of the IFS contests offered by Synky after December 21, 2022, were permissible IFS contests, for which tax pursuant to Racing Law section 1407 is owed,” said the Commission in its settlement.
The operator was also ordered to cease its services in New York State and pay $17.5 million in settlement, based on the revenue Underdog generated through purported IFS contests from New York customers in that period.
“This settlement is another example of the Gaming Commission looking out for the gaming public,” said Commission chair Brian O’Dwyer. “We encourage fantasy sports players to play only through permitted or registered operators that are subject to our comprehensive regulations that protect New Yorkers.”
There are currently eleven licensed fantasy sports operators in New York, comprising Boom Fantasy, DataForce, DraftKings, FanDuel, For Players By Players, MastersFantasyLeagues.com, RealTime Fantasy Sports, SharpLink Gaming, Splash Sports Synkt Games (trading as letsRUMBL) and Yahoo.
Underdog cooperated with the Commission’s investigation and has applied for a permanent fantasy sports licence in New York. The company also plans to expand its products to New Jersey and Delaware later this month.