DraftKings' Payment Processor must keep serving them

Earlier this week, it was reported that Vantiv Entertainment Solutions, a major payment processor for DraftKings and FanDuel, would stop serving both companies. However, a recent update suggests that Vantiv is “under contractual obligation” to fulfill their duties to both daily fantasy sports (DFS) sites.

The Consumerist reports that David Boies, Counsel to DraftKings, says Vantiv must legally serve their customers for the foreseeable future.

“We are not aware of what Vantiv may or may not have told other industry participants about its plans,” Boies explained. “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.”

In a story originally appearing in the New York Times, Vantiv allegedly notified both DraftKings and FanDuel that they’d have to stop serving them. The payment processor was on record as saying they’d stop serving DraftKings, FanDuel and any other DFS site as of Feb. 29.

NY Times reported that the final straw was seven more states declaring DFS to be illegal gambling. Assuming Vantiv were to pull their service from DraftKings and FanDuel, it would be a huge blow, considering that they handle a lot of the processing for both sites.

Of course, as the NY Times points out, other companies like PayPal could step in and take additional work. But it wouldn’t be totally out of the question for PayPal to follow Vantiv’s lead if the latter did stop serving DFS companies.

“We are aware of Vantiv’s recent decision to discontinue processing payments for Daily Fantasy Sports services,” said Martha Cass. “We continue to review and consider ongoing developments in relation to daily fantasy sports.”

Sarah Jane Hughes, an expert on payment processors and a professor at the Indiana University Maurer School of Law, believes that Vantiv’s potential exit would decimate the DFS industry.

“This is a game changer because I’m not sure who will touch this industry if Vantiv won’t,” Hughes said.

If Vantiv is at all wavering in their DFS involvement, it has to do with the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which states that both online gaming sites and their payment processors are on the legal hook.

DFS is the only form of online gaming that was exempted from this federal law. However, states theoretically have the right to choose what forms of gambling are allowed within their borders, and many are saying that DFS needs to go.