DraftKings is using this new software to keep people from playing illegally
Thomson ReutersDraftKings CEO Jason Robins speaks during an interview with Reuters in New YorkDraftKings announced on Friday evening that it is partnering with an outside software company to prevent play in states where daily fantasy sports betting is banned.
The site will be employing GeoComply's new "Solus" geolocation service, which was designed specifically for the Daily Fantasy Sports industry and is already used by DraftDay, another DFS site.
The announcement comes not long after The New York Times reported that users in all states where daily fantasy sports are "considered illegal" could access the site through a proxy server which makes the player's internet connection appear to originate from a different location.
In its press release on the matter, DraftKings noted that Solus provides the "best available defense against proxies."
However, a source close to DraftKings told Business Insider that the decision to implement location-based restrictions was not the result of any specific criticism or reports.
According to the source, the GeoComply software was activated in "recent days" and the "definitive" rollout of such a service was already in discussion at least a month ago.
Right now, DraftKings does not allow users to register or play from Arizona, Iowa, Louisiana, Montana, or Washington, where daily fantasy sports-betting is generally thought to be illegal. In Nevada, the games are explicitly considered gambling and thus require a license to operate legally in the state.
DraftKingsA screenshot from the DraftKings website.The source close to DraftKings could not elaborate on exactly where the geolocation software would target, only telling Business Insider that DraftKings complies with the laws of every state in which it operates.
Earlier this month, New York's Attorney General Eric T. Schneiderman issued a cease-and-desist order to DraftKings and competitor site, FanDuel to stop taking bets in the state, claiming that play constitutes gambling in New York.
DraftKings and FanDuel are both fighting the attorney general's order, but an attempt to land a temporary restraining order against the cease-and-desist was denied.
Thomson ReutersPeople protest in front of New York Attorney General Eric Schneiderman's office following his decision to shut down fantasy sports sites FanDuel and DraftKings, in the Manhattan borough of New YorkThe New York State Supreme Court will hold an emergency hearing regarding the sites' legality on November 25th.
FanDuel has temporarily suspended play in New York until the legal issues are resolved, but DraftKings continues to operate in the state, citing the attorney general's claim that he would not take action against the company before the hearing.
Boston-based DraftKings has come under scrutiny from the Massachusetts attorney general, who has drafted regulations limiting monthly deposits, restricting marketing, and requiring disclaimers, as well as setting a minimum age of 21 for participation.
DraftKings said in a statement that despite "some concerns with the draft regulations" that it hopes to see changed, a DraftKings spokesperson expressed the company's intent to cooperate with the attorney general and to "immediately begin taking steps to prepare to implement the changes to our product that the Attorney General requires."