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UPDATE 10/21: We are no longer able to access DraftKings from Nevada under the conditions described below.
UPDATE 10/18 9:11 PM PDT: We are still able to enter new real-money contests while located in Nevada under the conditions described below.
UPDATE 10/18 3:53 PM PDT: DraftKings has issued a statement regarding their approach to blocking play in Nevada.
Tests by LSR reveal that, as of October 18, DraftKings is not fully blocking players located in Nevada from entering real-money contests despite an order from regulators requiring DFS sites to cease operations in the state.
Meanwhile, operators including FanDuel and StarsDraft blocked our identical attempts at entering real-money contests while located in Nevada.
Nevada Gaming Control Board Chairman A.G. Burnett told LSR via email that “we are aware of this and the matter is being looked into by the GCB Enforcement Division.”
“We have been doing our own testing as well,” Burnett continued. “If the decision is made to prosecute, the potential exists for both felony and misdemeanor violations. We will consult with our counsel at the Nevada Attorney General’s Office. ”
The implication is that anyone physically located in Nevada can still play for real money on DraftKings as long as the mailing address listed on their account is from another state (excluding other blocked states).
We were asked to confirm via a check-box that we were “not a resident” of Arizona, Iowa, Louisiana, Montana, Nevada, or Washington State. We checked the box. No further verification occurred.
Our results seem at odds with a statement from DraftKings on October 15 regarding the company’s position on serving customers in Nevada:
Unfortunately, we now have to temporarily disable our product for our thousands of customers in Nevada in order to be compliant in all jurisdictions.
Our results appear to directly clash with a description of DraftKings’ “sophisticated methods” for identifying user location that a company spokesperson provided to LSR on October 16:
We are able to track location a variety of ways and have sophisticated methods both internally and via third parties to ensure we are complying with the law in all jurisdictions. Some of these tools include IP tracking, verification through payment methods and GPS tracking on mobile devices. Our fraud team explores all incidents.
But our ability to enter new contests despite the ban appears to generally confirm what a DraftKings employee told players on TwoPlusTwo last year regarding the company’s approach to identifying a user’s location (emphasis ours):
You will not be able to use the mobile app to make financial transactions or deposit with paypal on the website but every other function of the site works based on your established residence.
DraftKings does appear to restrict accounts with a mailing address located in Nevada from entering new real-money contests.
And that restriction appears limited to the account itself and not the IP address or any other identifying characteristic connected to the user or their device.
“Regulators (or perhaps prosecutors) will certainly want to know how many Nevada residents played in DraftKings contests since Friday,” gaming attorney Daniel Wallach said after reviewing our test. “That will go a long way to determining whether any criminal charges are brought.”
The failure of DraftKings to identify our location “raises questions about the efficacy of other internal controls and safeguards,” Wallach said.
We conducted an identical test at FanDuel and StarsDraft on October 17.
Both sites immediately recognized our location within Nevada and explicitly prohibited us from entering real-money contests.
Both sites identified our location as a blocked or prohibited location in the message explaining why we were prohibited from entering real-money contests.
We did not test additional sites. It is possible that DraftKings is not alone in its approach to blocking activity in Nevada.
These are the key takeaways:
The failure of a daily fantasy sports site to employ sophisticated location identification software represents a unique threat in Nevada.
State regulators are well-versed in the issue of location verification thanks to the Nevada’s regulated online poker and mobile sports betting products.
LSR spoke with several people familiar with the situation who asserted that most major daily fantasy sports operators do not deploy geolocation tools that rise to the level of sophistication and accuracy of the geolocation tools utilized by state-regulated online poker or sports betting providers.
Gus Fritschie, the CTO of SeNet International, a firm that focuses on gaming security, to LSR that based on the brief tests he performed “it appears likely that it would be possible to enter contests on sites that are only performing IP-based geolocation by utilizing a proxy service such as Tor or other IP spoofing techniques.”
“In order to comply with state restrictions the sites need to employ robust geolocation services that go beyond just IP data as in regulated jurisdictions such as Nevada and New Jersey,” Fritschie added.
From the outside, we’re left to guess.
All we know for sure is that DraftKings is not blocking us from entering new-real money contests when we’re clearly located in Nevada.
Based on feedback and commentary from various sources, DraftKings appears to focus their location identification efforts on a few points:
That combination would fall far short of the geolocation technology employed by regulated online poker operators in New Jersey or Nevada.
DraftKings released the following statement to LSR at 3PM PDT on October 18:
On Friday 10/16 we notified all Nevada customers of the issue and requested that they withdraw all funds and close their accounts. We also implemented blocking mechanisms for Nevada residents from creating new accounts, depositing money or playing new games. Because our game is nuanced in the fact that we allow late swaps we allowed players who had already entered games on Thursday to be able to continue their full experience with the product until games close and are paid out on Monday regardless of their location.
I have requested clarification on how we were able to enter new contests while located in Nevada as recently as Sunday, October 18 at 9pm PDT — two days after the threshold described above.
I have also requested clarification if “blocking mechanisms” are intended for: