PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

DraftKings & FanDuel May Lose Payments Provider

By Raymond Pucci
February 2, 2016
in Analysts Coverage
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
paying by check

Caught in the crossfire between the daily fantasy sports industry and state regulators, Vantiv is experiencing a crash course in risk management. At stake is the future survival of the annual $2 Billion (and counting) US Internet sports gaming marketplace. The two major players, DraftKings and Fan Duel, are satiating the thirst of avid fantasy sports fans by offering daily pools of Internet wagering for beginners and experts alike. Vantiv is the sole payments processor that provides the technology necessary to operate the online fantasy sports wagering. In recent months, at least 7 state Attorneys General are claiming these are Internet gambling sites and therefore illegal. The industry counters, saying fantasy sports are games of skill, given that athlete performance knowledge and quantitative skills, not simply luck, are needed to participate.

Vantiv Entertainment Solutions, a payments processor for daily fantasy sports sites DraftKings and FanDuel, told the companies this week it would stop processing wagers and payouts and would exit the space amid rising legal tensions, according to The New York Times. It’s unclear what percentage of total payments Vantiv processes for DraftKings and FanDuel, which control more than 90 percent of the daily fantasy sports market. However, Vantiv’s exit illustrates the mounting toll the companies face as numerous states continue to designate the activity illegal online gambling.

Daily fantasy sports is a hyper-accelerated form of wagering money on sporting outcomes dependent on the performance of real athletes. Because players don’t have control over the outcome of a game, a handful of states like New York, Illinois, and Texas consider the activity gambling akin to online poker, which was banned by the Unlawful Internet Gambling Enforcement Act of 2006. DraftKings and FanDuel disagree, choosing instead to call daily fantasy sports a game of skill because players choose which athletes to wager on. That designation would exempt the activity from the 2006 ban.

DraftKings says the company hasn’t heard from Vantiv regarding its decision to stop working with daily fantasy sports sites, adding an air of confusion to the ordeal. “We are not aware of what Vantiv may or may not have told other industry participants about its plans,” David Boies, a DraftKings lawyer, said in a statement. “However, to be clear, first, Vantiv has not told DraftKings that it plans to cease fulfilling its contractual obligations as of ‘Feb 29, 2016’ (or any other date). Second, Vantiv is under court order to continue to fulfill its contractual obligation to DraftKings.”

Consider this ongoing battle to be a “play under booth review.” While awaiting states’ legal action and pending trial dates, the game is still on for fantasy sports, fittingly enough as Super Bowl 50 approaches. However, the tradeoff for Vantiv is to decide between being embroiled in possible legal action versus providing their technology services to a very lucrative target market.

The legal actions initiated by the states’ Attorneys General could be seen as a defensive play, given that fantasy sports betting represents a major competitive threat to the lucrative state lottery systems and sanctioned casinos, which seemingly have reached market saturation. With time still left on the clock for fantasy sports players, possible outcomes are long, legal battles or an agreed upon settlement, with maybe even the states ultimately getting a piece of the action.

Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group

Red the full story here

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    commercial card, Allpay ClearBank Prepaid Payments, wealth transfer

    How Banks Can Capture the Wealth Transfer from Boomers to Gen Z

    June 20, 2025
    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result