This could mark the beginning of daily fantasy sports — and possibly fantasy sports, period — being federally regulated.
In a landmark decision Thursday, Nevada declared daily fantasy sports as gambling, meaning that DraftKings and FanDuel will be required under the state's law to obtain a license to operate.
"Since offering [daily fantasy sports] in Nevada is illegal without the appropriate license, all unlicensed activities must cease and desist," a notice released by the Nevada Gaming Control Board said, as reported by USA Today.
Nevada being the first state to take banning action follows the New York Attorney General's office opening an inquiry into each site and the United States Department of Justice and FBI investigating the business models of DraftKings and FanDuel. All moves stemmed from last week's news of a DraftKings content manager using insider information to win $350,000 on the rival FanDuel site, as the companies and billion-dollar industry has been under heavy scrutiny since. Even before that, though, Congress sought to review the legal status of fantasy sports and sports gambling as a whole.
With each FanDuel and DraftKings valued at over $1 billion and giving out millions in weekly prizes, this latest action by Nevada could lay the groundwork for daily fantasy sports and fantasy sports as a whole eventually being federally regulated, unable to skate by as a skilled game instead of gambling anymore.
Both companies reacted to Nevada's ruling late Thursday in separate statements to USA Today. Although each outlet might decide to obtain a gambling license to operate in Nevada, in the meantime, thousands of customers in the state won't be able to play its daily fantasy games.
"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 said in a statement to the press. "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."
DraftKings' statement said the following:
"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."
Be sure to follow T-Lounge on Twitter and visit our Facebook page.
