Daily fantasy sports, facing an uphill legal battle on several local fronts, may have suffered an even bigger setback Friday when a major payment-processing company notified sites that it would no longer handle their clients' transactions, The New York Times reported.
Vantiv Entertainment Solutions told its daily fantasy clients — including industry giants FanDuel and DraftKings — that it “will suspend all processing for payment transactions” related to DFS in the United States and its territories effective Feb. 29.
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The Times cited a letter from Vantiv that it had obtained that read, in part:
“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.”
Daily fantasy sports sites don't handle players’ deposits and withdrawals, instead relying on payment processors such as Vantiv. Without the processors acting as the transaction middle man, sites such as FanDuel and DraftKings — unless they take on the processing themselves — are essentially unable to operate.
According to The Times, it's unclear what percentage of DFS payments Vantiv handles. However if another processing company doesn't step in to handle even tens of millions of dollars in transactions — or if major banks and credit card companies follow Vantiv’s lead — it could cripple a $2 billion industry that already is fighting attorneys general from coast to coast over whether daily fantasy is a game of skill ore merely unregulated Internet gambling.
