Fantasy companies dealt blow by major payment processor

“As you are aware, an increasing number of state attorneys general have determined that daily fantasy sports (“DFS”) constitute illegal gambling”, the letter reads.

DFS sites like DraftKings and FanDuel generally do not handle player banking functions (deposits and withdrawals) internally.

The New York Times (http://nyti.ms/1P3lkvt) reported Saturday that Vantiv Entertainment Solutions told daily fantasy clients this week that it would “suspend all processing for payment transactions” related to daily fantasy sports in the United States and its territories on February 29.

How this will effect daily fantasy sports users in the short term remains unclear, but the Times contends that the long term consequences could be devastating.

The Times reports if another financial processing company doesn’t step in, or another credit card company or major bank steps away from handling the flow of millions of dollars in transactions, it could seriously hurt DFS companies beyond fix. Without access to these processors and gateways, DFS sites would be effectively unable to operate. He continues by saying, “Although in recent weeks D.F.S. operators have raised numerous arguments to the contrary, to date those arguments have been unsuccessful and/or rejected”. The executive, Jonathan Ellman, who is chief transaction and marketing counsel for the company, said in the letter that Vantiv would consider re-entering the marketplace when legal hurdles has cleared. New York Attorney General Eric Schneiderman was granted an injunction to prevent FanDuel and DraftKings from operating, although the injunction was stayed pending ongoing appeals sought by the sites.

Payment processors such as Vantiv are increasingly concerned because those who participate in illegal gambling could be subject to penalties under the Unlawful Internet Gambling Enforcement Act of 2006.

The fast-growing daily fantasy sports industry got a cordial reception in California’s state Assembly Wednesday as lawmakers easily approved regulations that would control fantasy action in the country’s most populous state should they become law.

“It’s our responsibility as legislators to make sure they’re playing in a safe and regulated game, where people are not being taken advantage of, where identity theft is not going on, where underage children are not playing”, Gray said.