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Fantasy Sports Websites Under Scrutiny For Testing Legal Limits

9/04/15 2:31 PM EDT
With the 2015-16 NFL season about to kick off, daily fantasy sports websites like DraftKings and FanDuel are likely to attract lots of attention for their splashy ads and supposedly giant payouts. Some, though, may soon be attracting attention for a giant misjudgment about the law governing the business. Daily fantasy games represent a relatively small portion of the sports gaming industry. A trade website estimates the amount of revenue the companies generate from football games at around $4 billion. By contrast, the Washington Post recently reported that entire sports gambling industry both legal and illegal could be worth nearly $400 billion annually. Still, the business has grown enough to attract some big names. Both DraftKings and FanDuel have received millions of dollars from media giants like Comcast and institutional investors like Kohlberg Kravis Roberts & Co. LP and Google Ventures. Montreal's Amaya, which in 2014 acquired online poker website PokerStars for $4.9 billion, got into fantasy sports on Aug. 13 with the acquisition of Austin, Texas-based Victiv for an undisclosed price. The daily fantasy site launched last September will be rebranded StarsDraft. But while investors continue to focus on growing profits, other experts are questioning the legality of some games that, while not nearly as popular as football, are nonetheless testing the limits of what is permissible.
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