Daily Fantasy Sports Scandal: Harry Reid Backs Nevada’s Call For Regulations

Nevada gaming regulators are ordering the high-profile websites DraftKings and FanDuel to cease operations unless they get a gambling license.

A notice issued by the Gaming Control Board said the sites must stop offering their contests to Nevada residents immediately, and until they are granted a license. Customers of the two biggest daily fantasy sports websites have filed at least four lawsuits against the sites in October 2015, following cheating allegations and a probe into the largely-unregulated multi-billion dollar industry.

FanDuel echoed that statement and said it was “terribly disappointed that the Nevada Gaming Control Board has decided that only incumbent Nevada casinos may offer fantasy sports”. Unlike traditional sports betting in Las Vegas, customers play against others, not the house, and winning isn’t determined by a single game’s outcome.

Nevada’s decision came amid growing backlash by regulators and investigators, including New York’s attorney general, after it was revealed employees often played on competing sites, raising questions about possible insider information being used to win.

The sites will likely be making their case for legalization across the country, if they haven’t already, as lawmakers and regulators pore over their own gambling laws and wonder where sites like DraftKings and FanDuel fit in.

DraftKings and others in the fantasy sports industry, including competitor FanDuel, have insisted their sites aren’t gambling and are legal under a 2006 federal law that exempted fantasy sports from an online gambling prohibition. “DraftKings and FanDuel employees have access to both things, neither of which is public”.

Daniel Wallach, a sports law expert from Florida, said the Nevada board’s decision is not going to “cause an extinction of fantasy sports from Nevada, forevermore”.

Nevada’s Attorney General has released the full opinion that led to the state declaring daily fantasy sports (DFS) to be gambling; a document that uses the words of DraftKings CEO to support its conclusion.

Nevada’s situation is distinctive in a few ways, Dayanim said.

“I think we have to be very careful about that concept and ensure that anybody who’s participating in these activities is protected”, he said. “If playing daily fantasy sports is a truly a necessity, the smart player should travel to a jurisdiction where legality is less at risk and enter from there”. It was enacted at a time when season-long fantasy sports matchups, not daily ones, were becoming popular.

California Assemblyman Adam Gray, D-Merced, who introduced a bill to legalize fantasy sports there, said Nevada’s decision provided more evidence of the need for oversight.