Wednesday December 2,2015 : DRAFTKINGS FILES ANOTHER LEGAL ACTION
Daily fantasy sports operator sues payment processors regarding their withdrawal of services.
DFS market leader DraftKings has launched litigation in a Boston court against payment processing firms Optimal and Vantiv, accusing them of breach of contract.
The two companies withdrew their services to DraftKings and other DFS operators following the issue of a cease and desist warning by the New York Attorney General early in November, alleging that the legality of daily fantasy sports was questionable
The business publication Forbes speculates that the payment processing companies are wary of the federal Unlawful Internet Gambling Enforcement Act of 2006, under which they could be held liable for knowingly “accepting any credit or funds from a person in conjunction with the latter’s participation in ‘unlawful Internet gambling.’”
Forbes notes that both processors probably have escape clauses in their contracts with DraftKings which could cover their withdrawal of services on legal grounds.
Vantiv has also been named in a New York class action filed last week by New York DFS player Yehuda Guttman in the U.S. District Court for the Southern District of New York
The complaint alleges that banking defendants lent money or credit to players for wagers, and the card companies received a fee from the banks for facilitating the money transfer, whilst the payment processors serve a "player banking function," receiving a fee as the financial intermediary between the gambling sites and their customers.
The banks have allegedly collected and continue to collect debts on the credit they lent for the purpose of wagering…and the filing claims that New York law prohibits the enforcement or collection of debts issued for illegal gambling.