If anyone knows gambling when they see it, you would expect it to be Nevada gaming regulators. So it might be significant that the Nevada Gaming Commission has declared one-week fantasy sports games to be unregulated gambling.
In a memorandum, Nevada Gaming Control Board Chairman A.G. Burnett said he asked the state attorney general's office and others to examine enterprises like DraftKings and FanDuel to determine if they were gambling operations.
“Based on these analyses, I, along with staff, have concluded that DFS (daily fantasy sports) constitutes gambling under Nevada law,” Burnett wrote. “More specifically, DFS meets the definition of a game, or gambling game pursuant to Chapter 463 of the Nevada Revised Statutes.”
Game of skill
DFS has been considered legal because it had been judged to be a game of skill, rather than a game of chance. But Burnett says the games involve wagering on the collective performance of individuals participating in sporting events.
Under current law, Burnett says, if you are going to operate such games – as DraftKings and FanDuel do – then you must be licensed.
As a result, all unlicensed daily fantasy sports games – and that's all of them – must cease and desist operating in Nevada – meaning consumers in Nevada can't play.
Meanwhile, The New York Times reports the FBI has made inquiries into the operations of daily fantasy sports websites after players of the games and lawmakers leveled charges of insider trading and predatory practices.
At least one state attorney general, New York's Eric Schneiderman, has also launched an investigation. Schneiderman has sent letters to the executives of both DraftKings and FanDuel seeking information about company policies when it comes to employees participating in DFS.
“It’s something we’re taking a look at,” Schneiderman said in a brief statement last week.” Fraud is fraud. And, consumers of any product – whether you want to buy a car, participate in fantasy football – our laws are very strong in New York and other states that you can’t commit fraud.”
In a letter to DraftKings CEO Jason Robbins, Schneiderman expressed concern over reports that company employees or agents may have gained an unfair financial advantage in the contests by accessing non-public data.
“These allegations, and your company’s subsequent statement, raise legal questions relating to the fairness, transparency, and security of DraftKings and the reliability of representations your company has made to customers,” Schneiderman wrote.
Both DraftKings and FanDuel, which are among the biggest advertisers on television, have denied employees unfairly benefited from insider information. But both companies have altered policy to bar employees from participating in DFS games on rival websites.