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Updated: Oct. 20; 7:30 a.m.
One day you’re the hot new startup, daily fantasy sports websites garnered intense interest from everyone from the NFL to venture capitalists in Silicon Valley.
Then your rapid growth, an insider trading scandal, and the ability to raise hundreds of millions of dollars attracts the attention of state regulators and lawmakers.
Now that attention has led to FanDuel, DraftKings being banned in Nevada after state gaming regulators ruled the games are similar to gambling and must be licensed.
Nevada Gaming Control Board Chairman A.G. Burnett wrote in a notice to licensees that he and his staff had concluded that daily fantasy sports constitutes gambling under state law.
According to the control board, FanDuel and DraftKings must apply for a gaming license in order to legally offer daily fantasy sports in Nevada. Burnett wrote the licenses were necessary because the industry “involves wagering on the collective performance of individuals participating in sporting events.”
“Therefore, since offering (daily fantasy sports) in Nevada is illegal without the appropriate license, all unlicensed activities must cease and desist from the date of this notice until such time as either the Nevada Revised Statutes are changed or until such entities file and obtain the requisite licenses to engage in said activity,” Burnett wrote.
In response, DraftKings said it “strongly disagreed” with the Nevada Gaming Control Board’s decision, saying the company will work “diligently to ensure Nevadans have the right to participate in what we believe is legal entertainment that millions of Americans enjoy.”
But in a statement, DraftKings said the company will “temporarily disable” their website in order to be complaint in Nevada. Daily fantasy sports websites now operate in every state except Arizona, Louisiana, Iowa, Montana and Washington.
“We understand the gaming industry is important to Nevada and, for that reason, they are talking this exclusionary approach against the increasingly popular fantasy sports industry,” the company said.
FanDuel did not respond to requests for comment. In a statement, FanDuel said Nevada gaming regulators "decided that only Nevada casinos may offer daily fanatsy sports" in the state.
"We belive we have always operated within the law and will continue to do so while working with officials to remedy this situation," the company said. "In the interim, regrettably, we are forced to cease operations in Nevada and will no longer be offering competitions in the state."
Meanwhile, FanDuel, who claims that Nevada regulators and others are misrepresenting what they do, are asking supports to sign an online petition opposing any measure that would ban onlien fantasy sports.
"Now, we need you to stand with us to show that millions of fans belive fantasy sports should remain legal and accessible to all who love the game," FanDuel wrote on its website.
According to the Fantasy Sports Trade Association, there are 56.8 million people playing fantasy sports this year in the U.S. and Canada, compared with just 500,000 in 1988.
FSTA Chairman Peter Schoenke told Politico that the group's "300 member companies operate in nearly every statate." Schoenke said his group looks forward to "constructive discussions with lawmakers about the fanatsy sports industry."
The Chicago-based trade association, which will hold its winter conference in January in Las Vegas, has set up an online petition encouraging Nevada customers to tell state lawmakers that daily fantasy sports should be legal statewide.
Howard Stutz, gaming reporter and columnist, Las Vegas Review-Journal; Jeff Ifrah, founding member, Ifrah Law
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