Amaya Fantasy Sports Unit Pulls Out of Nevada After Ruling

  • Seeks legal status for controversial online sports contests
  • Company contrasts view with larger rivals DraftKings, FanDuel

Amaya Inc., owner of the StarsDraft fantasy sports business, pulled out of Nevada after that state’s casino regulators said companies running such contests were illegal gambling operations unless licensed.

Amaya announced the action in an e-mailed statement Friday. The company, which paid $4.9 billion for the PokerStars online business last year, acquired the fantasy sports operation in August.

“As a proponent of state regulation of daily fantasy sports, we respect the decision of the Nevada Gaming Control Board and no longer allow Nevada consumers to play for real money on StarsDraft,” Amaya said. “We are an advocate for strict state regulation of DFS and the recent activities at some companies underscore the need for state regulation.”

Amaya’s position stands in contrast to those of DraftKings and FanDuel, which both said in statements that they disagreed with the gaming control board’s decision. They say their businesses aren’t gambling and don’t come under the oversight of casino regulators, views that highlight the growing debate about daily fantasy sports.

“Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy,” DraftKings said.

Amaya, based in Pointe-Claire, Quebec, also said StarsDraft recently withdrew from Michigan, Florida and Canada.

Daily fantasy sports, in which customers pay entry fees and pick rosters of real life athletes in the hopes of winning millions of dollar in prizes, is growing fast in the U.S. DraftKings and FanDuel have raised hundreds of millions of dollars from investors including KKR & Co., Time Warner Inc. and Major League Baseball.

The companies have been inundating sports fans with ads for their services in an attempt to build up their base of customers, which already total 56.8 million in the U.S. and Canada, according to the Fantasy Sports Trade Association.

The legality of the business is ambiguous in several states.

Fantasy sports sites wanting to return to Nevada will have to pay the state’s 6.25 percent gambling tax and limit action in the state to players within its borders, A.G. Burnett, chairman of the Nevada Gaming Control Board, said in an e-mail Friday.

Burnett’s comments highlight some of the ramifications of the control board’s decision to ban fantasy sports in Nevada, unless the operators are licensed by the state.

Limiting players to just one state has proven a challenge for Nevada online poker sites, several of which have gone out of business, according to Jeffrey Silver, an attorney specializing in casino law in Las Vegas.

Nevada’s decision could prompt other states to conclude they also need to regulate the businesses, according to James Gatto, a casino attorney in Washington.

“It’s going to be a state-by-state fight,” Gatto said. “They’re fighting the fight now.”

David Geller, who runs the fantasy sports site DailyMVP, said he shut off service to Nevada customers in five minutes using software that identifies where players are located.

Given the cost of getting licensed and the prospect of paying gambling taxes, it was unlikely his company would seek to return to Nevada, Geller said in an interview Friday.

“It just becomes another state in which we don’t do business,” he said.

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