The bank confirmed the news to Bloomberg this afternoon, saying that the halt on DFS transactions will remain until the court reaches a decision on whether or not these sites violate the state’s laws against illegal gambling.
UPDATE: After initially declining to comment on the news, FanDuel tells Consumerist that it is “unaware of Citigroup’s attempts to prohibit their New York based customers from playing fantasy sports but we are grateful that there are various payment options and companies that allow their customers to make their own decision about what fantasy sports they can play. We remain committed to providing sports fans the opportunity to play fantasy while we pursue legal and legislative action to clarify the law.”
DraftKings earlier told Consumerist that it was not commenting at the moment, but may issue a statement later.
In all but a few states — Arizona, Washington, Iowa, Louisiana, and Montana — DFS sites had been operating as legal, thanks to a carve-out in the Unlawful Internet Gambling Enforcement Act [UIGEA] of 2006.
That law prevents financial institutions from transacting business with online gambling operations. However, it explicitly exempts fantasy sports, which it labels a “game of skill.”
The catch is that the UIGEA also includes the condition that, if a state’s laws would deem fantasy sports betting illegal, then those laws trump the game of skill exception. That’s why neither DraftKings nor FanDuel have operated in the five states mentioned earlier.
Then, in late 2015, New York Attorney General Eric Schneiderman concluded that the two sites don’t mesh with existing state law. In Nov. 2015, he ordered both companies to cease and desist operating in the state, and then sued them when that did not happen.
For now, both DraftKings and FanDuel continue operating in New York while the case continues its way through the legal system.
Attorneys general for some other states, including Illinois and Texas, have likewise stated their opinions that DFS sites are illegal gambling operations under their state laws. However, those AGs have not taken any further actions to stop the sites from continuing to do business.
Still other states’ AGs have shown more support for DFS. In Massachusetts, the attorney general proposed changes that would make the sites more consumer-friendly. Earlier this week, Rhode Island AG Peter Kilmartin didn’t mince words when he declared that ” I am confident that daily fantasy sports sites are currently legal in Rhode Island.”