Cincy payment biz said to cut fantasy sports

Posted at 4:10 PM, Jan 30, 2016
and last updated 2016-01-30 16:14:01-05

NEW YORK (AP) -- An Ohio company that processes payments for daily fantasy sports sites says it will no longer handle their payments and will pull away from the $2 billion industry in February, according to a newspaper report.

FanDuel, DraftKings and other daily fantasy sports sites have been under assault in recent months as attorneys general in several states find the games illegal. Losing a payment processor would be the latest blow to the businesses because they do not handle players' deposits and withdrawals, leaving that to processors.

The New York Times reported Saturday that Vantiv Entertainment Solutions told daily fantasy clients this week that it would "suspend all processing for payment transactions" related to daily fantasy sports in the United States and its territories on Feb. 29.

The Cincinnati-based company referenced opinions by "an increasing number of state attorneys general" that daily fantasy games are a form of gambling or illegal under their state laws. Jonathan Ellman, chief transaction and marketing counsel for Vantiv, said in a letter obtained by the newspaper that operators' arguments in their defense "have been unsuccessful and/or rejected."

Neither Ellman nor a spokesman for Vantiv returned phone calls from the newspaper for comment.

New York-based FanDuel and Boston-based DraftKings, the two dominant daily fantasy sports sites, argue their contests are games of skill allowed by law and have mounted legal challenges to preserve their activities.

David Boies, a lawyer for DraftKings, said in a statement that Vantiv must continue to fulfill its contractual obligations to DraftKings. He said Vantiv hasn't told DraftKings that it plans to stop processing payments Feb. 29.

"We are not aware of what Vantiv may or may not have told other industry participants about its plans," he added.

A spokeswoman for FanDuel said the company had no comment.

Sarah Jane Hughes, an expert on banking and payment systems, said Vantiv was a dominant player in the online gaming industry and its abandonment of daily fantasy sports was a severe blow.

"This is a game changer because I'm not sure who will touch this industry if Vantiv won't," Hughes, a professor at the Indiana University Maurer School of Law, told the newspaper.

PayPal Holdings Inc. also processes payments for daily sports companies.

"We are aware of Vantiv's recent decision to discontinue processing payments for Daily Fantasy Sports services," PayPal spokeswoman Martha Cass said in a statement. "We continue to review and consider ongoing developments in relation to daily fantsy sports."