Strike one back for the casino gamblers.
The Daily Fantasy industry has long claimed their practice is legal—despite placing wagers on the outcomes of sporting events through individual player performance—because it is not technically gambling. As Awful Announcing pointed out earlier Thursday, DraftKings has an entire page on its website dedicated to the legality (100% legal, the site claims) because daily fantasy is a game of skill, not chance, and therefore not gambling. The site claims DFS is legal in 45 of 50 states.
After today, their math might be wrong.
— Joe Drape (@joedrape) October 15, 2015
The Nevada Gaming Control Board announced on Thursday that it considers DFS to be gambling, and all gambling companies need to be licensed.
Here is the release, in full:
Over the last several months, Nevada Gaming Control Board (Board) staff has analyzed the legality of pay-to-play daily fantasy sports (DFS) pursuant to the Nevada Gaming Control Act and the regulations adopted thereunder. I further asked the Gaming Division of the Office of the Nevada Attorney General to perform a legal analysis as to whether DFS activities conflict in any way with Nevada law. Based on these analyses, I, along with Board staff, have concluded that DFS constitutes gambling under Nevada law. More specifically, DFS meets the definition of a game or gambling game pursuant to Chapter 463 of the Nevada Revised Statutes. Moreover, because DFS involves wagering on the collective performance of individuals participating in sporting events, under current law, regulation and approvals, in order to lawfully expose DFS for play within the State of Nevada, a person must possess a license to operate a sports pool issued by the Nevada Gaming Commission. Further, a licensed operator who offers DFS must comply with all laws and regulations that apply to licensed sports pools.
Therefore, since offering DFS in Nevada is illegal without the appropriate license, all unlicensed activities must cease and desist from the date of this Notice until such time as either the Nevada Revised Statutes are changed or until such entities file for and obtain the requisite licenses to engage in said activity. Although Nevada gaming licensees who have received approval to operate a sports pool may expose DFS for play themselves in Nevada (in compliance with all applicable statutes and regulations), such licensees should exercise discretion in participating in business associations with DFS operators that have not obtained Nevada gaming approvals. While this Industry Notice is intended to provide clear guidance as to Nevada law, Nevada licensees wishing to conduct business with DFS companies should also conduct thorough and objective reviews of DFS activities under the laws of other states and any applicable federal laws.
The relevant point is that since the Nevada Gaming Control Board deems DFS to be gambling, it must be licensed or is deemed “illegal.” Hence, the cease and desist until either the state statutes are changed or DFS sites file and obtain licenses. Good, ahem, luck with that.
The biggest rub is that Nevada’s Gaming Board stats that companies with existing licenses can essentially create their own DFS games for customers, which could be yet another knock to the Daily Fantasy industry online.
Per Daniel Kaplan of SportsBusiness Journal, American Gaming Association President and CEO Geoff Freeman released a statement about the NGCB decision:
“The casino gaming industry has repeatedly called for greater legal clarity on daily fantasy sports. We appreciate that the Nevada Gaming Control Board has provided that clarity as well as a roadmap for DFS companies and casinos to provide popular fantasy sports within Nevada borders. We will continue to seek additional clarity in other jurisdictions, as eliminating ambiguity is in the best interests of all parties, including consumers.”
This is clearly a huge knock against mega DFS sites like DraftKings and FanDuel, who broke the bank with an amazing idea, but grew too fast and too recklessly to fit into the existing world of big-money gambling.