Nevada Shuts Down Fantasy Sports Sites after Calling Them ‘Gambling’

Fantasy sports sites, on the heels of a betting scandal prompted by what detractors called “insider trading,” received a shutdown notice from the state of Nevada as regulators and lawmakers turn their attention to making new rules to cover the popular online venues.

On Thursday Nevada regulators determined that the fantasy sports sites were no different than any other type of sports betting and that the sites should be considered gambling. Regulators then ordered the sites to be shut down in Nevada until operators apply for state gambling licenses.

Nevada didn’t target long-term fantasy sports sites, though, only the daily or weekly sites where fans can make bets on a week-to-week basis.

One of the leading fantasy sites, FanDuel, issued a statement criticizing the decision by the Nevada commission: “This decision,” the statement said, “deprives these fans of a product that has been embraced broadly by the sports community, including professional sports teams, leagues and media partners. We are examining all options.” The statement concluded by saying, “In the interim, because we are committed to ensuring we are compliant in all jurisdictions, regrettably, we are forced to cease operations in Nevada.”

The popular sports betting sites, such as FanDuel and DraftKings, are currently considered a game of skill in most state and with the federal government meaning that the outcome is determined by the ability of players to track trends and assemble statistics, not pure chance like normal gambling. Consequently, to date no regulations have been imposed on the sites. But that is changing.

The new onslaught of investigations by lawmakers and regulators was sparked by allegations that employees of two leading fantasy football betting sites were found to have shared game and player data with each other which helped them make a lot of money betting on the sites. In one case an employee of DraftKings made $350,000 on rival site FanDuel using what detractors called “insider information.”

The two sites issued a joint statement to assure users of their sites that steps were being taken to put a halt to the situation, but the move didn’t come fast enough to head off a slew of different states and politicians from announcing investigations into the scandal. New regulations are certainly on the way for this currently unregulated industry.

The operator of one fantasy sports betting site, StarFantasy, pulled out of ten states, including Nevada, to attempt to stay on the right side of state laws governing gambling.

Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com


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