Nevada daily fantasy sports players found their access to the largest providers shut down Friday, less than 24 hours after the Nevada Gaming Control Board told the operators their businesses violate state gaming law.
DraftKings and FanDuel, the two largest daily fantasy sports websites, said they would abide by the ban imposed Thursday.
However, the sites that control 90 percent of the daily fantasy sports market disagree with the board’s finding that their activities constitute sports wagering. DraftKings and FanDuel both circulated on-line petitions to their Nevada customers Friday, encouraging them sign in opposition to the regulatory order.
Customers in Nevada found their daily fantasy sports accounts listed as “restricted” late Thursday night and Friday morning.
Control Board Chairman A.G. Burnett said Nevada residents can still participate in daily fantasy sports through a licensed sports pool operator.
Several sports book and casino operators said Friday they weren’t planning to launch daily fantasy sports websites with others now out of the picture.
“We have no plans to do so,” said William Hill U.S. CEO Joe Asher.
In a statement, MGM Resorts International said the Strip casino giant “is not focused on participating in the daily fantasy market at this time. We are hopeful that the daily fantasy industry will be able to return to the Nevada market in the future and provide consumers with its innovative brand of entertainment.”
Gaming industry analysts and observers said Friday there were more questions than answers after Nevada became to first state to block daily fantasy sports for legal reasons.
Five other states — Arizona, Louisiana, Iowa, Montana and Washington — said their residents can’t participate because of state-specific regulations against cash prize awards. On Friday, the Illinois Gaming Control Board said it would seek a legal opinion on daily fantasy sports sites.
“The big question is we don’t have a firm sense of what the threshold will be for compliance,” said Chris Grove, publisher of LegalSportsReport.com.
Under the order, Nevada customers could participate in daily fantasy sports on DraftKings and FanDuel in another state, such as California. However, Las Vegas visitors would conceivably find their access to daily fantasy sports cut off in Nevada.
“It depends on the operator,” said Washington D.C. gaming attorney Jeff Ifrah. ” Keep in mind that not all operators use geo-blocking software. Many rely on self-disclosure, that of course may change now, at least in Nevada.”
Nevada’s ruling came a day after the Wall Street Journal reported that the U.S. Justice Department and the Federal Bureau of Investigation are looking into the business model of daily fantasy sports operators and trying to determine whether they violate federal laws.
Several members of Congress, including Rep. Dina Titus, D-Nevada, have called for hearings on the legality of daily fantasy sports, questioning if the activity is skirting the 2006 Unlawful Internet Gambling Enforcement Act, which prohibits financial transactions associated with online wagering.
Reno attorney Greg Brower said a federal solution might clarify the issues.
“The Control Board and Attorney General delivered a clear statement,” Brower said.
According to the analysis, the Control Board determined that daily fantasy sports involves “wagering on the collective performance of individuals participating in sporting events.” To “expose” the websites for play in Nevada, the operator would need a sports pool gaming license.
The Control Board decision goes against the arguments made by daily fantasy sports companies that they are games of skill and not gambling.
“We strongly disagree with this decision,” DraftKings spokesperson Sabrina Macias said in an email. “Unfortunately, we now have to temporarily disable our product for our thousands of customers in Nevada in order to be compliant in all jurisdictions.”
FanDuel said it was “terribly disappointed” by the Control Board’s decision that “stymies innovation and ignores the fact that fantasy sports is a skill-based entertainment product loved and played by millions of sports fans.”
PokerStars owner Amaya Inc., which operates the fantasy sports website StarsDraft, agreed to halt efforts in Nevada.
“As a proponent of state regulation of daily fantasy sports, we respect the decision of the Nevada Gaming Control Board and no longer allow Nevada consumers to play for real money on StarsDraft,” said Amaya spokesman Eric Hollreiser.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.