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Amid Industry Troubles, Nevada Treats Daily Fantasy Sports As Gambling

AUDIE CORNISH, HOST:

Daily fantasy sports - is it gambling? The state of Nevada says yes. So it's ordered the big players - DraftKings and FanDuel - to cease operating until they can get gambling licenses in the state. It was just last week that the industry fell under scrutiny because its own employees were winning big in its own contests. Chris Grove is the editor of legalsportsreport.com, and he joins me now.

Welcome to the program.

CHRIS GROVE: Thanks for having me.

CORNISH: So give us more detail on what the Nevada regulators had to say yesterday.

GROVE: Nevada regulators said that after an investigation by Gaming Control, assisted by analysis from the state attorney general, that they concluded daily fantasy sports does constitute gambling under Nevada state law and as a result requires a license in order to offer legally in the state. This has been reported in some places as Nevada banning daily fantasy sports, but what has really happened is they've said this is a gambling product and if you're going to offer it in the state, you have to have a license - just the same way that you'd need a license to offer any gambling product in the state.

CORNISH: So are people freaking out, basically? I mean, what's the industry saying?

GROVE: The industry has, by and large, respected the request of Gaming Control. Most major operators that I'm aware of have left the state and did so within hours. Players obviously have some questions about where this leaves them in terms of the security of their funds and their ability to access those funds. And I think there's also a larger question here about exactly what measures daily fantasy sports sites are going to put in place in order to ensure that players from Nevada are not accessing the product and what conditions regulators are going to ask for in order to feel assured that daily fantasy sports operators are complying with the request by Gaming Control.

CORNISH: Meanwhile, why now? I mean, you've talked about this being, in some ways, kind of self-serving for this state, right, because the casinos there can't reach gamblers in their homes through the Internet so this is helpful to them. But what's behind this decision's timing?

GROVE: I think that there has been a collision course set between the commercial casino industry and daily fantasy sports for some time now. I think that certainly we are seeing this conversation accelerated by the ubiquitous marketing that began in the run-up to this year's NFL season and certainly has continued through the first few weeks of that season. But this was a move that Nevada regulators telegraphed back in June or July. They indicated that they were undertaking this review. And, given the ambiguity regarding daily fantasy sports and the legality of the product, in some ways it was inevitable that we were going to see this conflict between gaming regulators in Nevada and daily fantasy sports operators.

CORNISH: Obviously, this issue is being attacked on a couple different fronts, right, starting with an FBI investigation?

GROVE: Right. You have an inquiry from the New York attorney general that was announced a couple of weeks ago. You have numerous representatives and senators at the federal level calling for not only congressional hearings but also an FTC investigation. You have reports that a federal grand jury has been empanelled in Florida to examine the legality of the daily fantasy sports industry. And then you also have reports from the Wall Street Journal and The New York Times suggesting that the FBI and the Department of Justice are in the initial stages of a probe into the industry. And that's just what's making the headlines. You also have open questions about this activity on the legislative front in California, in Indiana, in Pennsylvania and in Massachusetts. So there are no shortage of arenas in which this question is going to be asked and debated.

CORNISH: So it sounds like this is actually the beginning, not the end?

GROVE: I would say that this isn't even the first chapter, that this is more like the prologue.

CORNISH: Chris Grove is editor of legalsportsreport.com.

Thank you so much for speaking with us.

GROVE: Pleasure's all mine. Transcript provided by NPR, Copyright NPR.