Nevada GCB Outlaws DFS; FanDuel, DraftKings Leave State

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The Nevada Gaming Control Board announced on Thursday that unlicensed daily fantasy sports must stop offering its services to Nevada residents effective immediately. A.G Burnett, the chairman of the NGCB stated that DFS sites that wished to operate in the state would need to apply for licenses and that any site failing to comply could face charges and fines.

Those interested can read the full statement.

As a result of the NGCB decision, DraftKings and FanDuel have issued statements announcing that they are no longer offering services to players in the state of Nevada.

DFS Under Threat in Other States?

The move comes on the heels of a recent scandal that has rocked the industry stemming from concerns of employees exploiting insider information. Although no wrongdoing has been uncovered, the issue has brought to light the fragile framework in which the DFS operates as a unregulated industry.

Nevada is the first state to bar unregulated Nevada daily fantasy sports since the scandal broke nearly two weeks ago. Other states already had laws or regulations on the books that made operating a DFS site unfavorable. Most daily fantasy sports sites prevent players from Arizona, Iowa, Louisiana, Montana and Washington state from playing. Michigan, Vermont, Arkansas, Delaware, Kansas and Tennessee players are not accepted on a limited number of sites.

Florida was also reportedly recently investigating daily fantasy sports, which resulted in StarsDraft leaving that state. Federal authorities are also looking into whether there was any wrongdoing by DraftKings and FanDuel employees.

Statements from FanDuel and DraftKings

FanDuel and DraftKings have released statements on the move by the state of Nevada.

DraftKings

We understand that the gaming industry is important to Nevada and, for that reason, they are taking this exclusionary approach against the increasingly popular fantasy sports industry,”: DraftKing’s statement said. “We strongly disagree with this decision and will work diligently to ensure Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy. 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:

On behalf of our users in Nevada, FanDuel is terribly disappointed that the Nevada Gaming Control Board has decided that only incumbent Nevada casinos may offer fantasy sports,” FanDuel’s statement said. “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. This decision deprives these fans of a product that has been embraced broadly by the sports community including professional sports teams, leagues and media partners. We are examining all options and will exhaust all efforts to bring the fun, challenge and excitement of fantasy sports back to our Nevada fans. In the interim, because we are committed to ensuring we are compliant in all jurisdictions, regrettably, we are forced to cease operations in Nevada.

What’s Next for Daily Fantasy Sports?

The statement by the NGCB left open the possibility that DFS could lawfully operate in the state with a “license adhering to all laws and regulations that apply to licensed sports pools.” The move does not directly affect the legality of daily fantasy sports in any other state, although the possibility does exist for other states to follow.

Despite the the high profile data leak and subsequent fallout, the industry still had its biggest weekend ever according to SuperLobby, a DFS tracking site.

In regards to safety of funds, it is expected that DraftKings and FanDuel and other DFS sites leaving Nevada will promptly be paying their Nevada customers. While investigations happen internally with DFS sites and from appropriate authorities, it’s probably fair to say that the industry is more safe today than it was a month ago. Furthermore, expectations will be high that the industry will be better off as a result of the extra attention it has received over the last couple weeks.