FanDuel Cuts Off NY Deposits
Legal Sports Report

FanDuel No Longer Accepting Daily Fantasy Sports Deposits From New York As Legal Battle Escalates

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Leading daily fantasy sports site FanDuel will no longer accept deposits from players in New York, effective immediately.

“It is with great disappointment that we will begin the process of limiting access to users located in New York while we pursue the opportunity to be heard in Court,” the company said in a statement.

View the full statement here.

LSR asked DraftKings to clarify their position on New York given FanDuel’s decision. This statement was provided late Friday:

“DraftKings will continue to operate in New York while we pursue all legal options available to prevent the New York Attorney General from denying our customers their right to play the games they love.”

Are my funds safe?

The decision regarding where to keep – or not keep – money is an individual one.

With that said, there is no reason to believe this decision in any way represents a threat to the safety of player funds at FanDuel.

The announcement specifies that “all users in New York can and will absolutely be able to withdraw their money at any time.”

When DFS sites – including FanDuel – exited Nevada, there were no reported issues that I am aware of in terms of players having trouble accessing or cashing out their funds.

What’s behind the decision?

FanDuel didn’t specify.

Pressure from payment processors

One likely explanation involves the unwillingness of payment processing partners to continue to work with daily fantasy sports sites in New York due to the current legal uncertainty.

On Thursday we reported that one major payment gateway had told partner sites to block play from New York. Subsequent reporting indicated that issuing banks were also rethinking their relationship with fantasy sports operators.

LSR understands that many of these stakeholders were in direct communication with DraftKings and FanDuel over the issues in New York.

Banks and other stakeholders on the payments side of daily fantasy sports have fundamentally different risk thresholds than DFS sites.

For example, major issuing banks like Wells Fargo won’t handle credit card processing for regulated online poker in NJ – despite the fact that the activity is explicitly legalized, regulated, and appears to fall under the UIGEA carveout.

From the bank’s perspective, there’s simply not enough upside involved to mitigate the risk and compliance costs. It’s not a matter of legal or illegal – it’s a matter of risk versus reward.

Timeline: Legal trouble for DFS in New York

Here’s a quick catchup:

  • The first public expression of interest in DFS by the Office of the New York Attorney General (NYAG) came in the wake of controversy surrounding the accidental release of internal data by a DraftKings employee in late September.
  • News of an initial probe by Schneiderman’s office broke October 6.
  • On October 8, Schneiderman characterized daily fantasy sports sites as “totally unregulated gambling venues” during an interview with CBS.
  • Following those comments, there was little public word from Schneiderman on the issue, even as a New York lawmaker introduced a bill to regulate fantasy sports in late October.
  • On November 10 the New York Attorney General issued cease and desist orders to DraftKings and FanDuel, claiming that the sites were conducting illegal gambling under NY state law.
  • On November 13 both sites filed suit contesting those orders.

Photo credit: Rob Wilson / Shutterstock.com

Chris Grove
- Chris is the publisher of LegalSportsReport.com and OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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