Credit Card Processor Vantiv Will Drop DraftKings and FanDuel by the End of February
February 12, 2016
Vantiv Entertainment Solutions a major servicer of credit card payments in the Daily Fantasy Sports industry. However, Vantiv no longer wants to play this role.
When New York Attorney General Eric Schneiderman issued cease and desist letters to DraftKings and FanDuel, it seemed as though the national discussion on DFS legality would come to a head in the state.
Vantiv was first to express concern over clarity following Schneiderman’s action: could Vantiv be held at all responsible for indirectly assisting illegal gambling transactions? Some legal experts have commented that the 2006 Unlawful Internet Gambling Enforcement Act places liability for illegal money transfers onto the payment processor, not the gambling entity itself.
Jonathan Ellman is the chief transaction and marketing counsel at Vantiv. Ellman wrote, in a letter to Vantiv’s DFS clients:
“As you are aware, an increasing number of state attorneys general have determined that daily fantasy sports (‘D.F.S.’) constitute illegal gambling… 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.”
But after Schneiderman’s initial cease and desist letters were sent, Vantiv was quickly ensnared. It was the subject of an injunction issued in DraftKings’ home state of Massachusetts, which compels the company to continue processing payments for the duration of its pre-existing contract. That contract lasts until February 29. Vantiv has confirmed that that date will be the end of its operations involving DFS for the time being, but it may consider returning to the industry depending on the outcome of current litigation.
In a statement, Vantive CEO Charles Drucker said: “We have decided that it is prudent to suspend processing for transactions involving daily fantasy sports due to the increasing uncertain regulatory and judicial environment around these operations… We may re-enter the space in the future, should conditions change. In the meantime, we remain firmly committed to processing for online and land-based gaming operators, including state lotteries and other regulated gaming activities, where the regulatory and judicial framework are more clearly established.”
For the time being, Vantive is caught in a contradiction: it does not want to process payments for an industry that may soon be deemed illegal, but to break its contract with those operators violates the court order from Massachusetts. Understandably, Vantiv spokespersons have complained about “clarity” and the “uncertain regulatory and judicial environment around these operations.”
Major Credit Card Processors Drop FanDuel and DraftKings