Massachusetts Throws Daily Fantasy Sports A Bone

While FanDuel and DraftKings may have fallen out of the headlines over the last few months, it’s not because their legal battle with half the 50 states has settled down. If anything, the issue over the legality of the games these sites provide has only grown murkier, especially as the payments companies that were once supporting the burgeoning industry have begun to pick sides in the regulatory fight.

The latest development, however, seems to fall in favor of the pro-daily fantasy sports camp. The Boston Globe reported that Massachusetts decided Friday (March 25) to establish a set of regulations that would allow Boston-based DraftKings and FanDuel to continue to operate within the state. Attorney General Maura Healey outlined some of the generic prohibitions, such as banning users under 21 years of age and limiting advertising to minors, as well as more granular fixes for perceived imbalances during play. Going forward, players who have participated in 1,000 or more contests or have won three prizes of at least $1,000 values will be clearly labeled as “highly experienced” and players are restricted from using multiple accounts.

While some might see the additional measures to curtail betting on non-professional sports and gambling abuse as overly restrictive, DraftKings isn’t complaining – at least, as now-advisor and former MA attorney general Martha Coakley told the Boston Herald.

“In a short period of time, you see a very good set of tough consumer regulations in place that now let DraftKings move forward in Massachusetts,” Coakley said. “Although they don’t agree with every 
regulation, they’ve already started to comply and they 
will comply.”

Coakley’s advocacy ties a neat bow around why Massachusetts, unlike other states, was able to pass regulations that keep daily fantasy sports sites in business rather than shutter them whole. It remains to be seen whether these sites will be able to continue their torrid growths in the states that find regulatory ways to let them, but even a fair amount of uncertainty has already spooked a few payments processors — the bedrock of an online-only industry that depends on fast, secure transactions — that are starting to throw in the towel.

The first and most important company to do so was Vantiv. The Globe first reported on Vantiv CEO Charles Drucker’s comments during an investors’ call where he ever-so briefly touched on the recent notice it sent to clients informing them of the imminent shutdown of payments processing support.

“We have decided that it is prudent to suspend processing for transactions involving daily fantasy sports due to the increasing uncertain regulatory and judicial environment around these operations,” Drucker said on the call. “Importantly, revenue from daily fantasy sports is not material to the overall business and will have no impact on the outlook as we discussed today. We may reenter the space in the future, should conditions change. In the meantime, we remain firmly committed to processing for online and land-based gaming operators, including state lotteries and other regulated gaming activities, where the regulatory and judicial framework are more clearly established.”

If anything, the admission that the revenue gained from FanDuel and DraftKings by one of the industry’s most established payments processors doesn’t even make a dent in their overall operations should rattle the head honchos of daily fantasy sports more than anything else. After all, Massachusetts and other states can be desperate enough for tax revenue to look just about anywhere, but if Vantiv could be drawn into the legal battle that has FanDuel and DraftKings fighting for their lives, daily fantasy sports are going to have to make it much more worth its payments processors’ time to throw in with them and potentially against the regulations they normally cling to.