Nevada orders daily fantasy sports shut down as unlicensed gambling

Fri Oct 16, 2015 5:38am EDT
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By Liana B. Baker

(Reuters) - Fantasy sports operations, in which fans pay to compete for daily cash prizes in simulated athletic contests, were ordered shut down in Nevada on Thursday by the state's Gaming Control Board, which found they constitute unlicensed gambling.

The decision came a week after U.S. Senate Democratic leader Harry Reid of Nevada called on Congress to examine fantasy sports services after reports that an employee with access to insider information placed bets in the unregulated multibillion-dollar industry.

In a single-page notice on its website, board chairman A.G. Burnett said daily fantasy sports contests where players wager money fit the definition of gambling that requires a license from the Nevada Gaming Commission to operate a sports pool.

Any companies offering daily fantasy sports without a gambling license in Nevada were ordered to cease and desist immediately, Burnett said. However, gambling licensees with approval to run a sports pool may offer fantasy sports as well, he added.

The two largest U.S. fantasy sports companies, FanDuel and DraftKings, both operate in Nevada and hold large-scale events and tournaments in Las Vegas, the gambling capital of the United States, but neither possess a state gambling license. Both companies are privately held.

DraftKings, whose investors include the National Hockey League and Major League Soccer, said it strongly disagreed with the decision. The company "will work diligently to ensure Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy," it said in a statement.

FanDuel said it was disappointed with the regulators' decision "that only incumbent Nevada casinos may offer fantasy sports," adding that the company would examine its options while complying with the order.

The fantasy sports industry, which has exploded in popularity in the past few years, allows paying participants to assemble imaginary teams from rosters of real players and to accumulate points based on how those players perform in actual games. This has enabled fans to spend money on the games with a frequency that critics say is akin to sports betting.   Continued...

DraftKings CEO Jason Robins speaks during an interview with Reuters in New York, September 9, 2015.  REUTERS/Mike Segar