Citing concerns that numerous Attorneys General have found daily fantasy sports to be illegal gambling, a major payment processor is suspending all transactions related to DFS for at least one client.
On Thursday, Vantiv, which handles deposits and withdrawals for multiple daily fantasy operators, notified Birdie Fantasy Golf that it would no longer process payments related to fantasy sports as of Feb. 29.
It is unknown as of Friday morning if other operators have received similar notices, but this is not Vantiv’s first attempt to extricate itself from the legal quagmire surrounding daily fantasy sports.
[UPDATE: The New York Times reported Friday afternoon that Vantiv is also cutting ties with FanDuel and DraftKings]
Early Friday morning the company was still advertising its fantasy-related services on its website, but it has been skittish toward the industry since at least November, when New York Attorney General Eric Schneiderman proclaimed DFS to be illegal gambling and demanded that DraftKings and FanDuel cease accepting customers from the state.
Soon thereafter, Vantiv also asked the companies to block New York players, but since then the sites have been granted stays that will allow them to do business in the state pending a trial expected to commence this spring.
Naming both DraftKings and Schneiderman as defendants, Vantiv has filed a lawsuit in New York, asking the state Supreme Court to provide clarity to what it referred to as “conflicting court decisions.”
Making the legal terrain more treacherous for payment processors: Schneiderman’s salvo is just one of a growing number. More attorneys general have followed with similar opinions, including Illinois, Texas, and, earlier this week, Hawaii. A representative of the Attorney General’s office in Vermont has also said daily fantasy sports contests likely violate state gambling laws, and back in September, Nevada ruled that DFS is gambling and companies must seek a license to operate in the state.
In many states, the industry is pushing back via legislation that would make daily fantasy clearly legal under a regulatory framework. Bills have made significant progress in California and Florida this week, and similar legislation has been introduced in many more.
But the legislative process is a slow one, and while payment processors weigh their risks, some smaller DFS companies are struggling to stay afloat.
Birdie Fantasy Golf owner Kevin Marra says his site is folding.
“Our decision to halt operations is based on our belief that that the upcoming legislation will take 18-24 months to become clear and this will be prohibitively expensive to endure,” he wrote in a blog entry explaining the decision.