Vantiv Entertainment Solutions Won't Process Payments for FanDuel, DraftKings

Tim DanielsFeatured ColumnistJanuary 29, 2016

FILE - In this Oct. 25, 2015, photo, workers set up a DraftKings promotions tent in the parking lot of Gillette Stadium, in Foxborough, Mass., before an NFL football game between the New England Patriots and New York Jets. Daily fantasy sports companies are taking different approaches when it comes to deciding what states they’ll operate in as their industry faces increased scrutiny. Many, including market leaders DraftKings, FanDuel and Yahoo, continue to offer their online contests in most states while steering clear of a handful where there’s consensus local regulations effectively ban the games. (AP Photo/Charles Krupa, File)
Charles Krupa/Associated Press

Vantiv Entertainment Solutions, which has worked closely with the daily fantasy sports industry to handle payment processing, alerted its clients, including FanDuel and DraftKings, this week that it plans to stop providing services at the end of February.

Joe Drape of the New York Times passed along the news, describing it as "perhaps the biggest blow yet to daily fantasy sports."  

The New York Times obtained a letter sent by Vantiv's Jonathan Ellman that explained the company's decision to remove itself from the DFS industry:

As you are aware, an increasing number of state attorneys general have determined that daily fantasy sports ('D.F.S.') constitute illegal gambling. Although in recent weeks D.F.S. operators have raised numerous arguments to the contrary, to date those arguments have been unsuccessful and/or rejected.

David Boies, Counsel to DraftKings and Chairman, Boies, Schiller & Flexner LLP provided a statement on his client's behalf:

"We are not aware of what Vantiv may or may not have told other industry participants about its plans. However, to be clear, first, Vantiv has not told DraftKings that it plans to cease fulfilling its contractual obligations as of “Feb 29, 2016” (or any other date).  Second, Vantiv is under court order to continue to fulfill its contractual obligation to DraftKings."

The legality of DFS games has come under scrutiny across the United States since New York Attorney General Eric T. Schneiderman demanded the companies stop operating in his state on the basis they should be considered gambling and are thus illegal.

Craig Gima of the Honolulu Star-Advertiser reported earlier this week that Hawaii's Doug Chin joined a growing list of attorneys general, including those from Illinois and Texas, to follow in Schneiderman's footsteps on the issue.

The DFS companies have continued to operate while waiting for a final court ruling. Those in favor of allowing the games argue that it's a game of skill as opposed to illegal gambling.

Alas, the New York Times report noted they do not handle payment processing, which is instead done by companies like Vantiv. The sites "essentially are unable to operate" without the outside processors.

There is no timetable for when a final ruling about whether daily fantasy sports games should be considered illegal gambling will be made.