Eben Novy-Williams, Bloomberg · November 11, 2015 at 7:22 pm
(Bloomberg) — Not all daily fantasy operators are gearing up to fight New York’s rejection of their business. And at least one of their financial-industry allies also is pulling back.
Four small daily fantasy sports sites — TopLine Game Labs LLC, which operates fantasy site DailyMVP, DraftDay, DraftOps and MondoGoal Trading Ltd., an international platform focused on soccer — say they will stop letting users from New York enter their paid contests. And one financial institution said it will no longer facilitate card payments for New Yorkers seeking to use such platforms.
New York Attorney General Eric Schneiderman Tuesday ordered the two biggest daily fantasy sites, DraftKings Inc. and FanDuel Inc., to cease operations in the state, arguing their industry facilitates gambling. While those two behemoths indicated they will continue letting customers play while they contest the order, other companies got the message.
“It’s pretty cut and dry,” Shergul Arshad, chief executive officer of Isle of Man-based MondoGoal, said in a telephone interview. “We’re not state regulators. We understand why this may or may not be viewed by different states in different ways.”
Vantiv, a Cincinnati-based firm that helps facilitate card payments for some daily fantasy sports sites, told them to stop accepting players from New York, according to an e-mail it sent to clients and reviewed by Bloomberg. Vantiv didn’t respond to several requests for comment.
Keeping Tabs
Consumer credit-card issuers including JPMorgan Chase & Co. and Bank of America Corp. said New York customers can continue using their cards to fund daily fantasy sports accounts. Meantime, the lenders are monitoring the situation.
In letters to DraftKings and FanDuel on Tuesday, Schneiderman highlighted their omnipresent advertising, which “continues to promote DFS like a lottery, representing the game to New Yorkers as a path to easy riches that anyone can win.” Those messages, Schneiderman said, are a tacit admission that daily fantasy sports constitute “games of chance,” which are considered gambling, and not “games of skill” as the companies contend.
FanDuel CEO Nigel Eccles said in a call with reporters that his company is trying to schedule talks with Schneiderman. A DraftKings spokesman said in a statement that it had retained a law firm and intends “to pursue this fight to the fullest.”
Their first move, according to lawyers, would be to ask a judge to block Schneiderman from bringing any kind of criminal or civil action.
Big Blow
Losing the New York market would be a big blow for FanDuel and DraftKings. The state has the most daily fantasy players in the U.S. and accounts for 13 percent of the market, according to a player survey conducted by Eilers Research LLC. The second biggest state for daily fantasy sports is California, which makes up 10 percent of the customer base.
The breakdown is different for MondoGoal, which Arshad said is the largest overseas operator of daily fantasy games. The company takes in “hundred of thousands of dollars” in entry fees each month, with about 10 percent from the U.S. MondoGoal has partnerships with a number of European soccer teams, including Liverpool, FC Barcelona, Chelsea FC and AS Roma.
“We are pleased by reports that several daily fantasy sports operators have decided to comply with the law and cease gambling operations in New York,” Matt Mittenthal, a spokesman for Schneiderman, said in a statement. “We urge FanDuel and DraftKings to follow this example, by immediately meeting the terms of the Attorney General’s letter, and by ending their illegal gambling enterprise — and the economic and public health harms that come with it — here in New York.”
DailyMVP’s offerings and advertisements aren’t necessarily the same, said David Gellar, CEO of TopLine Game Labs LLC, which operates DailyMVP. Still the company will comply with Schneiderman’s order “until there is more clarity and/or a reversal of the AG’s position.”
Jay Z Reference
Nic Sulsky, president of Draft Day Gaming Group Inc., said the company decided Tuesday evening to suspend participation in “for-money” games by New York residents. He added that the company will continue to monitor developments and could reconsider if the circumstances change.
Marie Vozikis, operations manager for Emil Interactive Games, which runs DraftOps, said the same. DraftOps has partnerships with the National Hockey League’s Anaheim Ducks, Washington Capitals and New York Islanders, the NBA’s Washington Wizards and Brooklyn’s Barclays Center.
“Until New York passes legislation that clearly declares daily fantasy sports legal or DraftKings/FanDuel receive some declaratory ruling from a court of law that makes it safe to operate, we think it is wise not to operate within the state,” Vozikis said in an e-mail.
DraftKings and FanDuel are each valued more than $1 billion and have investors across the sports, media and venture-capital industries. A smaller operator, DraftPot, announced Tuesday that it would continue to operate in New York, tweeting the hashtag #FantasyForAll alongside a link to Jay Z’s song “Empire State of Mind.”
–With assistance from Christie Smythe in Brooklyn and Elizabeth Dexheimer in Washington.
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