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Sports in Society

Nevada Bans Daily Fantasy As Hits Keep On Coming For Industry's Power Players

The Nevada Gaming Control Board on Thursday night "banned unlicensed daily fantasy sports websites from providing their product to Silver State customers, saying the activity constitutes sports wagering," according to a front-page piece by Howard Stutz of the LAS VEGAS REVIEW-JOURNAL.The board said that daily fantasy sports websites like DraftKings and FanDuel "can apply for a Nevada gaming license to operate a sports pool." The board issued a cease-and-desist order that "bans the websites from Nevada." The decision "goes against the arguments made by daily fantasy sports companies that they are games of skill and not gambling." Eilers Research Managing Dir Adam Krejcik said the ruling "wasn't the nail in the coffin, but it certainly adds another element to a complex issue." He expected that the big daily fantasy companies "would go along with the ruling and halt operations" He added, "I wouldn't expect them to stay in and fight. (Nevada) is not a meaningful market" (LAS VEGAS REVIEW-JOURNAL, 10/16). In Las Vegas, J.D. Morris notes operators "must possess a sportsbook license in order to legally offer daily fantasy sports" in Nevada. FanDuel and DraftKings on Thursday night confirmed that they "are ceasing operations in Nevada while they consider their options." FanDuel in a statement said it was “terribly disappointed” in the board’s action. The company said that the move "only benefits 'incumbent Nevada casinos,' which regulators have permitted to provide daily fantasy sports if they already have a sportsbook license." FanDuel: "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." For its part, DraftKings "vowed to fight back." DraftKings: "They are taking this exclusionary approach against the increasingly popular fantasy sports industry" (LAS VEGAS SUN, 10/16).

SIN CITY: In N.Y., Joe Drape writes Nevada's move is "perhaps the most significant setback yet for a booming, unregulated industry." Nevada-based lawyer David Gzesh: "It should give other states pause because if it’s perceived as sports gambling here, no other state can offer it when it violates federal law." Nevada "also seemingly has the most to lose; its casinos have lacked the ability to stretch across state lines on the Internet, as daily fantasy sites have, to attract a wider, younger audience." The commission said that the state’s sports books "may offer daily fantasy games if they wanted, but warned about their associations" (N.Y. TIMES, 10/16). ESPN.com's David Purdum noted Nevada regulators "govern the country's main gambling hub in Las Vegas, and their actions could hold sway with regulators elsewhere" (ESPN.com, 10/15). In Boston, Borchers & Murphy write the decision "dealt yet another blow to a beleaguered industry that has rejected the gambling label, insisting that an exception in federal law lets fantasy sports operate as a game of skill." DraftKings and FanDuel must "now confront what would appear to be a no-win proposition: Acknowledge what the casino industry has said all along, that their system of paid entries and cash prizes is, in fact, gambling, or get out of Nevada." Boston College professor Richard McGowan: "I’d probably walk away from Nevada. You don’t want to admit you’re gambling. What a precedent that would set." Ft. Lauderdale-based lawyer Daniel Wallach: "They are surrounded. A year from now, we’re going to be in a highly regulated environment, and the fantasy industry and sports leagues won’t be powerful enough to stop it" (BOSTON GLOBE, 10/16).

HITS KEEP ON COMIN': The AP's Kimberly Pierceall noted in less than two weeks, "the two high-profile companies in the ever-growing industry had gone from being a seemingly unstoppable, untouchable force to facing intense scrutiny of their business practices and legality from investigators, lawmakers, regulators and even their own players." Thursday's move will likely be "closely watched by other states that allow gambling" (AP, 10/15). The WALL STREET JOURNAL's Sharon Terlep notes battles now "are playing out in several states over the legality of fantasy sports" (WALL STREET JOURNAL, 10/16). ESPN.com's Purdum cited sources as saying that the NFL "has been contacting members of the House Energy and Commerce Committee in an effort to prevent a congressional hearing on the league's relationship with fantasy sports." NFL VP/Communications Brian McCarthy in an email wrote, "We have been informing (Congressional) staff that the league and clubs have no equity interest. We explained the difference between the daily fantasy games and the fantasy offerings from the league. It is up to the members if it has a hearing. We were communicating with staff to make sure it had our information." U.S. Rep. Frank Pallone (D-N.J.) said, "It is no surprise that the NFL does not want a hearing on daily fantasy sports." Purdum notes the hearing "is expected to be granted, but as of Thursday had not been scheduled" (ESPN.com, 10/15).

STAYING IN LEAGUE: USA TODAY's Brent Schrotenboer writes the "mounting controversy" involving DraftKings and FanDuel have "made things awkward for sports organizations that recently jumped onto their big-money bandwagons." N.Y.-based crisis-communications firm Group Gordon Principal & CEO Michael Gordon: "If the facts continue to get worse, then these leagues will disassociate themselves or disinvest from the companies, because they don’t want to be associated with their brand. To a point, they’ll provide a shield. But if the facts get bad enough, then everybody is going to be playing hot potato with them" (USA TODAY, 10/16). In Boston, Bob McGovern writes under the header, "Lawsuits Keep Mounting For Fantasy Sites: Fantasy To Nightmare" (BOSTON HERALD, 10/16). Meanwhile, in N.Y., Bogdanich, Glanz & Armendariz write under the header, "The Dark Reality Of Online Sports Betting" (N.Y. TIMES, 10/16).

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