Citigroup Blocks New York Fantasy Transactions

news businessFantasy sports sites FanDuel Inc. and DraftKings Inc., already facing mounting legal and regulatory scrutiny, ran into more trouble when Citigroup Inc. said it was blocking transactions by New York state residents.

The move by the world’s largest credit-card lender added to the pressure in New York, the heart of the fantasy-sports industry’s legal woes since Attorney General Eric Schneiderman sued the companies in November. Schneiderman contends that daily fantasy sports are a form of gambling, which is illegal in New York. The firms say they offer games of skill, and are accepting New Yorkers’ business as while the case works through the courts.

Citigroup’s ban will stand until the courts make a final decision, spokeswoman Jennifer Bombardier said Friday in an e-mailed statement.

Representatives for FanDuel said that while they were unaware of Citigroup’s attempts to prohibit transactions, “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.” Boston-based DraftKings didn’t respond to requests for comment.

While it’s unclear whether the payments industry is legally vulnerable in this case, the perceived risk has grown with each state attorney general who has expressed skepticism about the legality of daily fantasy sports. “These opinions raised the level of legal risk for daily fantasy sports operators to an unacceptably high degree,” said Daniel Wallach, a sports and gaming attorney with the law firm Becker & Poliakoff.

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