Nevada regulators ordered every day fantasy sports sites like DraftKings and FanDuel to shut down Thursday, saying the arduous-to-miss sites which have flooded the marketplace with TV and Internet advertisements can’t function in the state and not using a playing license.
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The announcement added, “Nevada licensees wishing to conduct business with DFS companies should also conduct thorough and objective reviews of DFS activities under the laws of other states and any applicable federal laws”.
Last week, the sites confirmed confirmed that a DraftKing employee had won $350,000 in prize money in a FanDuel game. Operators face felony fines and 10 years in prison for running an illegal gambling site. Five states have prohibited them from operating, but none is as powerful and influential as Nevada, which has always been a bastion of legal gambling, has strict regulation and has the nation’s only active sports betting.
“This decision stymies innovation and ignores the fact that fantasy sports is a skill-based entertainment product loved and played by millions of sports fans”, the statement said. But gambling taxes are levied against gross gaming revenue, not profits, at rates of up to 70 percent in a few states.Whenyou legalize a form of gambling, the state looks around, finds out what the highest rate is in the country, and then goes higher, said Rose. A sign saying “Do not do business with DraftKings and FanDuel” would have been no less clear. “Daily fantasy sports is a skill game and is not considered gambling”.
The Federal Bureau of Investigation has opened a preliminary inquiry into the daily fantasy sports industry, a government official told USA Today.
“The legality of daily fantasy sports is the same as that of season long fantasy sports”, the company notes.
Both sites previously announced they have temporarily chose to prohibit employees from participating in online fantasy sports contests for money.
Although each outlet might decide to obtain a gambling license to operate in Nevada, in the meantime, thousands of customers in the state won’t be able to play its daily fantasy games.
Four lawsuits were filed in the past week in federal courts in New York, Illinois and Louisiana accusing the DraftKings and FanDuel sites of cheating.
Fantasy sports have exploded in popularity in recent years, in large part due to the promotion of DraftKings and FanDuel, which have raised hundreds of millions of dollars from investors such as KKR & Co., Time Warner Inc. and Major League Baseball. We naivelythought we could start this company for pretty cheap, but startup costs are high when youre in a regulated jurisdiction, said Daniel Feldman, one of the companys founders.
“Daily fantasy sports is an industry crying for consumer protection”, Rep. Frank Pallone (D-NJ), who called for an investigation of the industry last month, said earlier this week. Young stated the checks confirmed it, however “it doesn’t suggest we will disrespect state legal guidelines”.
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The shred of legitimacy to which these companies cling is the shaky contention that since – allegedly – clients thoughtfully pick players for their fantasy teams, they are engaged in a game of skill.
