This week, DFS company business plans absorbed another body blow when Vantiv Entertainment Solutions announced plans to cease doing business with DFS clients:
[The] payment processing company that handles a significant number of transactions for the two dominant daily fantasy sports companies notified the operators this week that it would no longer handle their payments and in fact was leaving the industry altogether. It is perhaps the biggest blow yet to an industry that has been pummeled by legal challenges in recent months.
What motivated Vantiv's decision?
The short answer probably consisted of three points: (a) while the Unlawful Internet Gambling Enforcement Act prohibits any company (including FanDuel and Draft Kings) from accepting a payment related to "unlawful Internet gambling," the Act also requires financial transaction providers (aka payment processors) such as Vantiv to refuse to process such "restricted transactions;" (b) the number of state attorneys general who opine that DFS is illegal seems to grow larger with each week that passes (AGs for Texas, Hawaii, Mississippi and Vermont recently joined the list); and (c) Vantiv--whose business most likely extends far beyond DFS-- does not want to jeopardize that business by being accused of processing "restricted transactions."
What's the lesson for companies in other industries?
Understanding how laws may be used by regulators to impact your business plan is an obvious part of risk recognition in Economy21c.
Understanding how laws may be used by regulators to impact third parties who are crucial to your business plan is a less obvious--but equally crucial--part of risk recognition in Economy21c.
Copyright 2016 by William Devine. All rights reserved worldwide.
Return to WilliamDevineEsquire.