Online payment processor Vantiv has announced it will no longer handle payments for daily fantasy sports operators, a potentially devastating blow for the already reeling DFS sector.
On Friday, the New York Times reported that Vantiv had informed its DFS clients – including market leaders DraftKings and FanDuel – earlier this week that it planned to “suspend all processing for payment transactions” for DFS in the US effective Feb. 29.
In November, Vantiv expressed its unease re its potential risk in processing DFS transactions in New York State after Attorney General Eric Schneiderman handed DFS operators a cease and desist order. That same month, DraftKings got a Massachusetts court order preventing Vantiv from refusing to handle DFS transactions. A frustrated Vantiv asked the New York courts for official clarification on the legality of its DFS activities.
Vantiv’s letter to its DFS clients notes the growing number of state attorneys general who have issued negative opinions on DFS’ legality, and while DFS operators “have raised numerous arguments to the contrary, to date those arguments have been unsuccessful and/or rejected.”
Vantiv says it remains “firmly committed to the online gaming and fantasy gaming segments” and will continue to work with stakeholders for “a long-term solution to the ongoing DFS controversy.” But until there is “better clarity and long-term certainty around the regulatory and judicial landscape,” DFS payments are off the table at Vantiv.
DraftKings and FanDuel will undoubtedly unleash their lawyers to pursue a court order to block Vantiv’s exit, similar to what DraftKings pulled off in its home state of Massachusetts.
ESPN’s Darren Rovell (@darrenrovell) tweeted a quote from DraftKings attorney David Boies saying Vantiv “has not told DraftKings that it plans to cease fulfilling its contractual obligations as of ‘Feb. 29, 2016’ (or any other date). Secondly, Vantiv is under court order to continue to fulfill its contractual obligation to DraftKings.”
It remains to be seen whether other payment processors will follow Vantiv’s lead, or whether some less risk-averse ones will ride to the DFS operators’ rescue. Should no help arrive from either the courts or the payments industry, the result could be crippling for DraftKings and FanDuel.