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Nevada wields the axe on fantasy sites

Neva

LasVegas
da lawmakers have shut down fantasy sports sites across Nevada after deciding they are effectively running gambling operations without a licence.

The states Gaming Control Board issued a “cease and desist” order on the likes of DraftKings and FanDuel and said they must apply for a licence if they want to return.

The operators responded by saying they "strongly disagreed" with the decision, which "stymies innovation" and "deprives fans" of a much-loved leisure pursuit.

A debate has raged throughout the US since the start of the football season as to whether these sites constitute gambling.

The bosses at these operators argue their games are skill-based and do not equate to gambling – thus they skirt the 2006 Unlawful Internet Gambling Enforcement Act via a loophole that allows games of skill – and have vehemently opposed sports betting.

But many commentators despair of these firm’s ubiquitous TV ads and have laughed off this argument. The author of the 2006 Act, former congressman Jim Leach, even declared it was “sheer chutzpah” for daily fantasy sites to claim the law he implemented gives them legitimacy.

Yet nobody has banned the sites – until now. Nevada is one of the few states where sports betting is legal, so the sites could be back up and running in future, provided they apply for a sports wagering licence.

But it could have severe ramifications across the majority of US states in which sports betting is illegal as they could soon be banned there and have no hope of returning.

Board chairman A.G. Burnett said: “Over the last several months, Nevada Gaming Control Board staff has analyzed the legality of pay-to-play daily fantasy sports pursuant to the Nevada Gaming Control Act and the regulations adopted thereunder.

“I further asked the Gaming Division of the Office of the Nevada Attorney General to perform a legal analysis as to whether DFS activities conflict in any way with Nevada law. “Based on these analyses, I, along with Board staff, have concluded that DFS constitutes gambling under Nevada law.

“Because DFS involves wagering on the collective performance of individuals participating in sporting events, under current law, regulation and approvals, in order to lawfully expose DFS for play within the State of Nevada, a person must possess a license to operate a sports pool issued by the Nevada Gaming Commission.”

FanDuel and DraftKings both operate in Nevada and hold huge tournaments in Las Vegas, but neither possesses a state gambling license.

In a statement DraftKings said: “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.

“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 added: “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.

“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.”

It caps a miserable fortnight for the operators. New York Attorney General Eric Schneiderman has launched an investigation into FanDuel and DraftKings after an insider trading scandal broke amid claims that employees of both companies were winning money on their rivals’ sites.

The US Justice Department and the FBI are also said to be looking into the business model of DFS firms and trying to determine whether they violate federal laws.
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