Pulling The Plug On Fantasy Gambling

February 9, 2016 at 9:25 am Leave a comment

After Taking a day off to celebrate America’s De Facto national holiday  down on Long Island,  where the Fortieth Annual Meier Family Super Bowl Party was held, your faithful blogger is back  but still can’t get football completely out of his head.

First, I am still trying to figure out how the Denver Broncos won while demonstrating that the forward pass is overrated.  Secondly,  to me the most interesting banking news over the last few days was the fact that Ctitigroup announced late last week that it would be blocking debit and credit card transactions involving  fantasy sports sites Fan Duel and Draft Kings in New York pending the outcome of lawsuits challenging their legality .

The decision, coming as it did right before Super Bowl 50, was the real life equivalent of Scrooge Stealing all of the Who’s presents on Christmas Eve, at least for the tens of thousands of football fans who have deluded themselves into believing that there  is skill involve in playing fantasy football against a million of their closest friends.

(Incidentally who made the decision to stop denoting Super Bowl’s with Roman numerals? Could it be, as my brother-in-law suggested, that T.V, execs were afraid that the viewing public wouldn’t understand  that Super Bowl  L” was a really big deal?).

When last I wrote about this topic in November (https://newyorksstateofmind.wordpress.com/2015/11/16/whos-going-to-gamble-on-fantn/), NY AG  Eric Schneiderman had sued to block  the companies from operating in our state.   NY law makes it illegal to gamble. The lottery is sanctioned by the State’s constitution for education funding. On December 11, New York Supreme Court Judge Manuel J. Mendez agreed with the AG but, moving quicker than a Payton Manning pass, which seems to take about 10 minutes to arrive in the vicinity of its intended receiver, New York’s appellate Division blocked the injunction pending its own decision which may take several months.

What perplexes me about Citi’s move is that nothing has publically changed which makes it any more vulnerable to executing fantasy sports transactions than it was a week ago. The Unlawful Internet Gambling Enforcement Act of 2006 (31 USCA Sec. 5301) banned using the Internet to make a bet or wager, but it stipulated that betting does not include participation in any fantasy or simulated sports games. (31 USCA Sec. 5362(ix)).  Instead it empowered states to define gambling in accordance with their own state laws. (31 U.S.C.A. § 5362(10) (West).   The AG argues that fantasy sports, as offered by these fantasy sites constitutes gambling as a matter of NY law.

Does this mean that the state legislature could preempt the court’s by passing a law clarifying that these online fantasy games are legal? Yes it does. If I were a gambling man my bet is that this is exactly what’s going to happen.

Vendor Management

Vendor management may be boring and time-consuming but with third-party due diligence being an increasingly important component of your compliance program a well-functioning system of vendor oversight will actually save your credit union $$$. Don’t take my word for it. Instead read this article in this morning’s American Banker which explains how $990 Somerset Trust  bank transformed its vendor management from a steel file cabinet and some spreadsheets to a streamlined system from which it recognized savings with software it developed in-house that organized  the process for collecting and accessing documents such as SASS audits.  The result:

“The bank figures the new software has brought about a 25% reduction in labor. Vendor meetings are more productive, the new vendor entry process is streamlined, data collection forms have been standardized, and tracking and monitoring are improved. Preparing for vendor meetings is easier and less time is needed to manage third-party relationships. Somerset Trust executives also say that by having internal programmers develop this technology, the bank saved five figures during implementation and thousands in monthly ongoing fees.”



Entry filed under: Compliance, Legal Watch, New York State. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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