DraftKings, FanDuel Pull Out Of Nevada, Circulate Petition

LAS VEGAS (AP) — DraftKings and FanDuel took a cue from another prominent tech company spurned by Nevada that was eventually welcomed back: get an angry public to petition lawmakers and make it legal.

Like the ride-hailing app Uber before it, the two titans of the daily fantasy sports industry sent links to an online petition to Nevada customers Friday.

The move comes a day after state regulators ordered them out of the state unless they get a gambling license — a decision being watched by other states and lawmakers weighing whether the sites constitute gambling or not based on their own laws.

In less than two weeks, the two high-profile companies in the ever-growing industry had gone from being a seemingly unstoppable, untouchable force to facing intense scrutiny of their business practices and legality from investigators, lawmakers, regulators and even their own players after it was revealed employees often played on competing sites, raising questions about possible insider information being used to win.

"We have seen reports of insider betting and of young people gambling thousands of dollars a day with these unregulated companies," said longtime Nevada Sen. Harry Reid in a statement Friday. Reid, a former state Gaming Control Board chairman himself, said "Unless more states follow, we are going to see more corruption and families torn apart because of unregulated, illegal gambling."

Neither DraftKings or FanDuel have said if they'll pursue a license in Nevada, a process that costs $500 up front as well as hourly costs and travel expenses to cover the intense background investigation by state agents into the companies and their leaders. DraftKings said in its email to customers it would work to ensure Nevada residents could play on the site again soon without saying how they would do so.

The sites will likely be making their case for legalization across the country, if they haven't already, as lawmakers and regulators pour over their own gambling laws and wonder where sites like DraftKings and FanDuel fit in.

California Assemblyman Adam Gray, D-Merced, who introduced a bill to legalize fantasy sports there, said Nevada's decision provided more evidence of the need for oversight.

"Even church fundraisers for bingo night have some oversight. With the amount of money we've seen and the amount of participation we've seen in California and across the country, we've got to have some regulation," he said in a telephone interview.

A Pennsylvania lawmaker that had originally proposed legalizing the sites now wants to ban daily fantasy sports unless their operated by the 12 casinos in the state.

Illinois regulators think daily fantasy sports is illegal under a state law prohibiting Internet gambling, but they plan to ask their state attorney general for a legal opinion next week. In Ohio, the issue is for state lawmakers since the contests don't fit neatly into state's definition of casino games.

Delaware finance secretary Tom Cook, whose office oversees lottery and casino operations, said state officials are reviewing Nevada's actions evaluating whether any of its conclusions would apply in Delaware, which allows parlay bets on NFL games as one of only a handful of states where legal sports wagering is allowed.

Michigan has been reviewing if the state's criminal gambling laws apply to daily fantasy sports before Nevada's decision Thursday, but "obviously it's something that would be taken into consideration," said Michigan Gaming Control Board spokeswoman Mary Kay Bean.

Mississippi's gambling commission is also looking into the issue. The group's executive director, Alan Godfrey, said the Nevada decision could have influence elsewhere.

Participants on the unregulated sites can compete in games involving professional or college sports, paying an entry fee that goes into a larger pool. They try to assemble teams that earn the most points based on real-life stats in a given period with a certain percentage of top finishers earning a payout.

Entry fees on DraftKings range from 25 cents to more than $5,000. Some prizes top $1 million.

The fantasy sports industry has argued the sites provide games of skill and not chance and are therefore protected by the 2006 Unlawful Internet Gambling Enforcement Act, which carved out a specific exemption allowing fantasy sports.

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Associated Press writers Don Thompson in Sacramento, Calif., Peter Jackson in Harrisburg, Pa., Randall Chase in Dover, Del., Sara Burnett in Chicago, Jeff Karoub in Detroit and Ann Sanner in Columbus, Ohio, contributed to this report.

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