Daily fantasy esports site Vulcun ceases operations in Nevada as a ‘precaution’

Nevada’s ruling that daily fantasy sports is gambling has implications that reach beyond football and traditional athletics.

Daily fantasy esports company Vulcun, which runs matches for video games like League of Legends, revealed to GamesBeat today that it is ceasing operations in Nevada. This means that you cannot wager money on your fantasy selections for the League of Legends 2015 World Championship later this month if you live in that state. The Nevada Gaming Control Board ruled last week that the nature of daily fantasy sports makes it gambling under the state’s real-money gaming codes. This will put a hamper on the earnings of startups in this space like DraftKings and FanDuel (which both also run esports matches) in addition to Vulcun. And this uncertainty about regulation may also scare away the investors that have, up to this point, poured money into the $2.6 billion industry.

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The NGCB specifically called out “sports” competitions in its ruling, and we’ve reached out repeatedly to the organization to ask if the state’s definition of “sports” also covers pro gaming. We’ve yet to receive a response, but we’ll update this post with any new information.

When we asked Vulcun if its team knew whether the Nevada ruling affected fantasy esports, the company’s chief executive officer Ali Moiz said he is “not sure.” But they are operating as if it does.

“We’ve shut down Nevada as a precaution,” Moiz told GamesBeat.

While this is rough for companies trying to build a business around fantasy esports, it likely doesn’t come as much of a surprise to most people involved. A recent story in The New York Times claimed that DraftKings and FanDuel employees were using insider knowledge to gain an advantage when making playing in daily fantasy matches on each others’ sites. That scandal led many to believe that increased regulation was on its way.

“[The ‘insider betting’ scandal] does introduce a larger regulatory risk but any investor looking at this is going to be well aware and comfortable with it,” Pitchbook senior research analyst Robin Riddell told GamesBeat earlier this month.

But Riddell also said that investors probably won’t change their feelings toward the space. That confidence in the long-term viability of fantasy sports and fantasy esports is important for a company like Vulcun as it attempts to push through this unpredictable period.