LAS VEGAS – Nevada regulators ordered daily fantasy sports sites like DraftKings and FanDuel to shut down Thursday, saying they can't operate in the state without a gambling license.
The decision comes amid growing backlash by investigators and regulators over the sites, which have grown in popularity in the past year, and could cause ripples in other states that have questioned their legality. Regulators elsewhere often watch decisions made by Nevada's Gaming Control Board since it governs Las Vegas area casinos.
Participants on the unregulated sites can compete in games involving NFL or college players, 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.
DraftKings and FanDuel say the sites provide games of skill and not chance, and are therefore protected by the Unlawful Internet Gambling Enforcement Act established in 2006.
Until now, the sites have been available in all but five states where their legality has been called into question.
"If you're licensed in Nevada, you're good to go," said A.G. Burnett, chief of the Gaming Control Board. That includes traditional sports books where gamblers generally wager on the outcome of a given game.
There are no licensed daily fantasy sports sites in Nevada.
A notice issued by the Gaming Control Board said the sites must stop offering their contests to Nevada residents immediately, and until they are granted a license. Operators face felony fines and 10 years in prison for running an illegal gambling site. The board said it worked with the state attorney general's office for several months to look into the sites' legality.
"Since offering (daily fantasy sports) in Nevada is illegal without the appropriate license, all unlicensed activities must cease and desist from the date of this notice," the decision said. The sites can apply for licenses.
Joe Asher, CEO of sports book William Hill's U.S. operations, has repeatedly said daily fantasy sports is gambling and should be treated like all other legal gambling operations. He said the board's decision speaks for itself.
"It shouldn't come as a surprise," Asher said.
Spokesmen for DraftKings and FanDuel did not immediately respond to requests for comment.
The American Gaming Association, which is doing its own review of the legality of daily fantasy sports, said it appreciated the Nevada board's review. It said the decision provided clarity, "as well as a roadmap for daily fantasy companies and casinos to provide popular fantasy sports within Nevada borders."
Daniel Wallach, a sports law expert from Florida, said the board's decision is not going to "cause an extinction of fantasy sports from Nevada, forevermore."
It confirms what many observers familiar with the gambling industry, including Wallach, have said all along. "Fantasy is a form of gambling that should be licensed just like sports betting, just like any other form of gambling," he said.
Still, Wallach doesn't think Nevada's decision will spread like fire to other states, even though its gambling agency carries the most sway among regulators.