Nevada regulator bans daily fantasy sports

In the latest blow to the beleaguered daily fantasy sports vertical, the Nevada Gaming Control Board has ruled after an analysis of the genre that its activities constitute gambling, and that operations in the state by companies without licensing like DraftKings and FanDuel must halt immediately.

The ruling caps a fortnight that has seen extensive negative media coverage, political and enforcement concerns, the convening of a Grand Jury in Florida, Attorney General reviews in two states, calls for a Congressional hearing, an FBI investigation and at last count player class actions in three states following allegations of questionable “insider” activity at DraftKings and FanDuel .

The ruling will be a blow to the market leaders, who have held some of their biggest live DFS events in Las Vegas; unless they can obtain licensing these will have to be relocated in the future.

Investors will also be concerned; both FanDuel and DraftKings have raised hundreds of millions of dollars from investors, used mainly to fuel massive advertising and promotional budgets as the billion-dollar rival companies strive to attract more players, and the Nevada decision could influence other states.

Media organisations will be monitoring the situation closely – DraftKings and FanDuel between them have boosted US media revenues by spending a combined total of around $150 million on advertising between June and September this year alone.

Responding to the Nevada ban, DraftKings said that it “strongly disagreed” with the NGCB decision and the exclusionary approach adopted by the regulator. The operator promised to work diligently to ensure that Nevada residents “…have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy.”

However, the company accepted that it will have to “temporarily” disable its product for “our thousands of customers in Nevada in order to be compliant in all jurisdictions.”

FanDuel commented that it was disappointed at the NGBC decision, noting that it meant that only incumbent Nevada casinos may offer fantasy sports.

“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 company said. “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.”

Eric Hollreiser, the communications chief at Amaya, which owns DFS operator StarsDraft, was quick to comment on the Nevada ban, saying in a statement: “As proponents of state regulation of DFS we respect the state’s decision and no longer allow Nevada consumers to play on StarsDraft.”

View the NGCB decision in full here: http://gaming.nv.gov/modules/showdocument.aspx?documentid=10481