Major Credit Card Processors Drop FanDuel and DraftKings
February 9, 2016
Major Credit Card Processors Drop FanDuel and DraftKings as Attorney Generals Condemn Daily Fantasy Sports
As a growing number of state Attorneys General voice their opposition to the legality of Daily Fantasy Sports, New York is becoming one of the biggest pitched battles for DFS giants DraftKings and FanDuel, and credit card processors are jumping ship.
Two major companies servicing the Daily Fantasy Sports payments--Cincinnati based Vantiv Entertainment Solutions., a major name in processing payments in state lotteries and other regulated gambling forms, and CitiGroup, the world’s largest credit card lender--have both taken steps to disentangle themselves from their Daily Fantasy Sports clients.
New York state Attorney General Eric Schneiderman issued cease and desist letters to both DraftKings and FanDuel last November, claiming that DFS operations “constitute illegal gambling under New York law.”
Schneiderman’s November 10 press release, however, flashed inflammatory language. He stated that “Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.”
FanDuel and DraftKings have been granted a stay on Schneiderman’s order, allowing them to continue business until the appeal of their court case in May. But insecurity in the industry persists.
Schneiderman’s opposition has been echoed by Attorneys General in several other states, including Illinois, Texas, Nevada, and Hawaii, leading Vantiv and CitiGroup to right-mindedly question the legal standing of Daily Fantasy Sports, and assessing their own vulnerability as they service DFS player’s transactions.
Vantiv was the first to be spooked by Schneiderman’s case, fearing it might leave them legally vulnerable because of their involvement. Seeing this, DraftKings successfully sued in the state of Massachusetts to compel Vantiv to honor its contract until expiration on February 29. Vantiv has since announced their intention not to renew said contract, citing “uncertain regulatory and judicial environment around these operations.”
On February 5, CitiGroup announced that it would also cease taking payments for FanDuel and DraftKings. This ban is effective in New York state only; it is assumed that Citi will continue to service payments made from other states.
FanDuel commented on the news, telling Consumerist that it was “unaware of Citigroup’s attempts to prohibit their New York based customers from playing fantasy sports but we are grateful that there are various payment options and companies that allow their customers to make their own decision about what fantasy sports they can play. We remain committed to providing sports fans the opportunity to play fantasy while we pursue legal and legislative action to clarify the law.” DraftKings has yet to comment.