The bank confirmed the news to Bloomberg this afternoon, saying that the halt on DFS transactions will remain until the court reaches a decision on whether or not these sites violate the state’s laws against illegal gambling.
Both DraftKings and FanDuel tell Consumerist that they are choosing to not issue a statement at this time.
In all but a few states — Arizona, Washington, Iowa, Louisiana, and Montana — DFS sites had been operating as legal, thanks to a carve-out in the Unlawful Internet Gambling Enforcement Act [UIGEA] of 2006.
That law prevents financial institutions from transacting business with online gambling operations. However, it explicitly exempts fantasy sports, which it labels a “game of skill.”
The catch is that the UIGEA also includes the condition that, if a state’s laws would deem fantasy sports betting illegal, then those laws trump the game of skill exception. That’s why neither DraftKings nor FanDuel have operated in the five states mentioned earlier.
Then, in late 2015, New York Attorney General Eric Schneiderman concluded that the two sites don’t mesh with existing state law. In Nov. 2015, he ordered both companies to cease and desist operating in the state, and then sued them when that did not happen.
For now, both DraftKings and FanDuel continue operating in New York while the case continues its way through the legal system.
by Chris Morran via Consumerist
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