DraftKings still operating in Nevada, despite order
The daily fantasy sports website DraftKings accepted entries into its contests for the weekend, apparently defying an order from the Nevada Gaming Control Board to quit operating immediately within the state.
Nevada regulators ruled Thursday that daily fantasy sports should be considered gambling, not a game of skill, and ordered the websites to suspend operations until the companies and their employees received state gambling licenses.
FanDuel and other smaller rivals did so, but a spokeswoman for DraftKings acknowledged that it made an exception for some of its customers in Nevada. The company, which is valued at more than $1 billion and has the financial backing of Major League Baseball and the NFL owners Robert K. Kraft of the New England Patriots and Jerry Jones of the Dallas Cowboys, allowed contest entries for the postseason baseball games and NFL 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 night, regardless of their location,” the spokeswoman said.
The spokeswoman added that although DraftKings disagreed with an opinion handed down this week by the Nevada attorney general, it took the decision seriously.
“We notified all Nevada customers of the issue and requested that they withdraw all funds and close their accounts,” the spokeswoman said by email. “We also implemented blocking mechanisms for Nevada residents from creating new accounts, depositing money or playing new games.”
On Saturday, the Nevada-based blog Legal Sports Report said it was able to enter multiple daily fantasy sports contests on DraftKings from a Nevada I.P. address — something it was unable to do on rival sites such as FanDuel.
A.G. Burnett, chairman of the Nevada Gaming Control Board, said he was aware of DraftKings’ stance and that his agency was monitoring the situation.
“We have been and will continue to test the DFS operators’ websites and apps to determine if they’ve disengaged from Nevada or not,” he said of the daily fantasy sports sites. “Failure to disengage can constitute a crime; we will work with our counsel on what are the next steps forward, should that be the case.”
The daily fantasy sports industry — and especially DraftKings — has come under intense scrutiny for the way it handles sensitive data and its aggressive recruitment of players. A federal grand jury has issued a subpoena to the leading trade group for fantasy sports as part of an investigation into the practices and legality of the booming, unregulated industry, according to two people involved.
The grand jury investigation is being conducted under the auspices of the United States attorney’s office in Tampa, Florida, which has declined to comment. The Fantasy Sports Trade Association, the group that lobbies on behalf of leading sites like DraftKings and FanDuel, was the target of the subpoena, but a spokeswoman declined to discuss it.
The scope of the investigation remained unclear, as did whether it was connected to interviews that FBI agents have been conducting — according to the people contacted by them — with competitors at daily fantasy websites.
Lawmakers and state regulators, meanwhile, see the games as a form of gambling that is prohibited by law. The New York attorney general’s office has also announced an inquiry into the sites. And the Illinois Gaming Board said Friday that it believed the daily fantasy sports sites were illegal and that it would ask the state’s attorney general, Lisa Madigan, for an opinion next week.