“Fantasy sports will continue to be an important feature in the US market, especially in states where it could take a while for sports betting to be regulated,” said CEO Peter Jackson.
Jackson added that he envisages a “different market construct” in the US in terms of the balance between free-to-play games and sports betting, given the strength of the DFS market.
“Having 100,000 customers in New Jersey is a good starting point,” he said.
“Our US strategy is to go after the B2C market under the FanDuel brand. We have secured market access agreements covering 15 states and 36% of the US population, including markets where regulation is expected by the end of 2019.
“It’s worth remembering that our US business is not a start-up. We have established brands, with FanDuel in sports and TVG in racing, an extensive product suite, operational expertise and we already operate in 45 states, including real-money wagering in 33.
CALIFORNIA v. IIPAY NATION OF SANTA YSABEL [re Internet Gaming – UIGEA]
Opinion by Judge Bea
The panel affirmed the district court’s summary judgment in favor of the State of California and the United States in their action seeking injunctive relief prohibiting Iipay Nation of Santa Ysabel from continuing to operate Desert Rose Casino.
Desert Rose Casino is exclusively a server-based bingo game that allows patrons to play computerized bingo over the internet. Iipay Nation is a federally recognized Indian tribe with tribal lands located in San Diego County, California.
The panel held that Iipay Nation’s operation of Desert Rose Casino violated the Unlawful Internet Gambling Enforcement Act (“UIGEA”). The panel held that the Indian Gaming Regulatory Act protected gaming activity conducted on Indian lands, but the patrons’ act of placing a bet or wager on a game of Desert Rose Casino while located in California, violated the UIGEA, and was not protected by the Indian Gaming Regulatory Act.
The panel further held that even if all of the “gaming activity” associated with Desert Rose Casino occurred on Indian lands, the patrons’ act of placing bets or wagers over the internet while located in a jurisdiction where those bets or wagers were illegal made Iipay Nation’s decision to accept financial payments associated with those bets or wagers a violation of the UIGEA.
Because Iipay’s operation of DRB violates the UIGEA, the Court of Appeals for the 9th Circuit AFFIRMED the district court’s order granting summary judgment to the Government.
IJI Law Comment —
However, the Court also noted the following: “[w]e take no position on whether Iipay would violate the UIGEA by accepting DRB bets or wagers exclusively from patrons located in jurisdictions where bingo is legal.” See, Footnote No. 15.
“States have traditionally handled regulation of gambling, supported by federal law in situations where an interstate of foreign element might otherwise frustrate the enforcement of state law,” posited the CRS report. “With respect to federal law, DFS may implicate at least four gambling-related statutes.”
In a savvy legal maneuver, the NYAG has amended its complaint against FD and DK seeking #DFS players’ full restitution for losses suffered on their sites in NY; this brilliant litigation tactic may not work, but it will almost certainly pit 90 + % of DFS players against the sites. I predict that DFS players today will be no different than iPoker players (or most other Americans for that matter) – give me my $ back…!
Saturday, November 14th 2015 — Ian J. Imrich, Esq.
Experts in geolocation — the technique of determining a computer’s location — say that blocking proxies is one of the first, and most straightforward, steps that websites take to keep users from restricted areas off the sites.
By stating in the “terms of service” that users in some regions are not allowed, while at the same time doing little to enforce the rule, online gambling companies around the world often try to have it both ways, said Feda Mecan, a senior official at Playing Legal, a site based in Germany that is devoted to legal gambling in the United States. “I think they are playing that card, to be honest,” Mr. Mecan said.
Then, according to a poker web forum the NYT has reported, a DraftKings employee appeared to provide public advice on how to circumvent geographic restrictions in the United States.
“It seems absurd that a daily fantasy sports operator with financial means would not implement the best possible technology,” Professor Marc Edelman of Baruch College said.
Whether by mistake or perhaps by design, the failure to timely, properly, and regularly employ readily available Geo-Blocking technology to comply with jurisdictional rules in certain States throughout the nation could prove disastrous in the ongoing investigations and pending legal proceedings against of one of the top two daily fantasy sports companies currently operating within the US.
The fantasy sports gaming business in the US is almost entirely unregulated. That’s just the way the NFL has always wanted it — until now.
After NFL’s lobbying extensively in late 2006 to get a “carve-out” from the hastily passed Unlawful Internet Gaming Enforcement Act (UIGEA) — a carve out that the US Department of Justice never supported (and if reports coming out are true) — the NFL is now quickly attempting to distance itself from the Daily Fantasy Sports (DFS) industry. See, e.g., NFL is reviewing the entire fantasy sports situation, reports the New York Post.
Why now? Well, here are just a few possible reasons that might help to explain the NFL’s Fall of 2015 back-tracking:
-Legal challenges to the nationwide sports betting ban in Federal Courts are pending and the NFL remains vehemently opposed to any sort of legalized sports wagering (while the NBA by contrast favors regulated sports betting);
-Two major NFL owners could be forced to sell their huge equity stakes within the DFS industry;
-NFL policy strictly prohibits NFL employees or team owners from participating in or facilitating any form of gambling — yet the same prohibitions do not apply to unregulated DFS skill gaming;
Meanwhile, what have Bob Kraft, Jerry Jones, and one major DFS site operator said about these reports? So far, The Cowboys, Patriots and DraftKings have declined comment. Will await to see how long their silence is deafening…
Why Now? (Especially given the fact that FanDuel is — and has been for some time — a UK-based gaming company that has not ever previously offered its DFS services to customers / markets beyond the US and Canada) Because the US market has become increasingly cloudy on the legal and regulatory front – as simple as that.
While the US market for DFS has not and will not likely be entirely shut down, it is now abundantly clear that it’s going to be a potpourri of State-by-State regulations and with uncertainty as to ring-fenced intra-state gaming activity versus inter-state customer pooling and resulting liquidity via State to State compact, and all with the possibility of Federal Intervention lurking ominously in the background — currently during an election year in the US.
Of course, FanDuel could have made this move years ago. The same could be said for its chief competitor Draft Kings. But, as is the case in many an eCommerce industry (or brick and mortar for that matter), the threat of regulatory activity and possibility of legal enforcement often hastens the moves of companies who have yet to diversify, divest, and divulge.
Strategic business maneuvering is more art than science. Here the creativity, while somewhat tardy, is still artistic.