Vantiv will stop processing transactions for its clients in daily fantasy sports amid government claims the sites are violating gambling laws, the New York Times reported Friday. 

The clients include FanDuel and DraftKings, and Vantiv's move is a major blow to an industry that's already reeling from pressure by officials in New York, Illinois and other states that claim the daily fantasy sports leagues are gambling sites. The sites claim they are games of "skill" and thus do not violate state gambling laws.

Vantiv, along with JPMorgan Chase, Capital One, American Express and Visa, is also named in a class action against financial institutions that work with the fantasy sports sites. The suit alleges the banks are making loans for gambling, and the processors are performing a "player banking function" by transacting payments between banks and the daily fantasy sports sites.

The Times reports Vantiv's latest move will could have "crippling" consequences for the $2 billion industry, which generally does not process its own payments.

Vantiv did not respond to a request for comment from PaymentsSource and did not comment to the Times. The newspaper cited an intercepted letter from Jonathan Ellman, a senior vice president of Vantiv.com, who said the daily fantasy sports sites' counter arguments to the regulators' gambling claims were unsuccessful. The letter did say Vantiv may resume processing when there's more clarity around the regulatory and judicial landscape related to daily fantasy sports leagues.

Daily fantasy companies offer cash prizes for a single day's performance, and have attracted hundreds of millions of dollars from investors, and are major advertisers at major league sports stadiums and arenas.

When states charge sports sites with gambling violations, the burden is on the sites to prohibit restricted transactions, the Times reports, citing legal experts.

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