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Spoil Sports? Fans Sue Card Brands, PayPal Over Fantasy Sports

The murky legal elements of daily fantasy sports have gone to court in a case that involves the names of some prominent payments players.

CNBC reports that a recent class action claim was filed in Manhattan federal court that names Visa, MasterCard and American Express, along with card-issuing banks and processors involved in the processing of payments on the popular fantasy sports sites FanDuel and DraftKings, which have risen to widespread popularity in recent months.

The complaint — which was filed on behalf of FanDuel and DraftKings players nationwide and which seeks the restitution of all money players have lost, as well as fees paid to the credit card companies, banks and processors — alleges those named were involved in a racketeering scheme which allowed players to enter online fantasy sports contests that amounted to illegal gambling. The relationships these sites enjoy with the credit card and processing companies has helped the two startups become billion-dollar businesses seemingly overnight.

“FanDuel and DraftKings would have been just a nice idea for these scammers if they didn’t take credit cards,” points out Hunter Shkolnik of Napoli Shkolnik, lawyer for the plaintiffs.

Detailed in the claim are accusations that the sports sites’ codefendants “knew or should have known” that they were online gambling sites under New York law and that the banks, credit card companies and payment processors profited from the operation of these sites by collecting transaction fees from players who used credit cards.

This is not the first time the credit card companies, issuers and processors have been named in legal documents surrounding the fantasy sports sites; however, the suit is the first to bring claims against them on behalf of FanDuel and DraftKings customers.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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