Vantiv Inc., the payment processing company fleeing the daily fantasy sports sector amid increasing regulatory pressure, said Wednesday that dropping the industry won’t have a noticeable effect on its sales.
Vantiv told most of its fantasy sports clients late last week that it planned to stop processing their payments at the end of February.
In a letter to clients obtained by The Boston Globe, Vantiv cited a growing number of rulings from state attorneys general that daily fantasy sports games may violate state gambling laws when cash prizes are at stake.
Vantiv publicly addressed the situation for the first time Wednesday. In a conference call with investors, chief executive Charles Drucker said revenue from daily fantasy sports clients “is not material to the overall business.” Vantiv earned $148 million in 2015 on revenue of more than $3.1 billion.
“We may re-enter the space in the future should conditions change,” Drucker said. Vantiv also will continue to serve other gambling-related customers, including state lotteries and casinos, “where the regulatory and judicial framework are more clearly established.”
The company did not address the legal headaches that could follow its decision to “suspend” daily fantasy sports.
Vantiv has already been sued by DraftKings for attempting to back out of its payment processing contract, which runs through mid-2017. A Suffolk County judge has issued a temporary restraining order to keep Vantiv from dropping DraftKings’ business.
Vantiv provides the key link between fantasy sports operators, such as Boston-based DraftKings Inc., and their paying customers, getting authorization from banks and credit-card issuers to transfer entry fees and prize payouts.
At least one state regulator, New York Attorney General Eric Schneiderman, has suggested that processing fantasy sports payments could expose Vantiv to liability under New York law.
Schneiderman is suing to have DraftKings and its top competitor, New York’s FanDuel Inc., banned from the state for allegedly violating gambling laws. The companies are fighting that lawsuit.
Gambling industry lawyers have said companies like Vantiv also could face federal legal action if they are found to be handling payments for a company that is violating state gambling laws.
Curt Woodward can be reached at email@example.com. Follow him on Twitter @curtwoodward.