NEW YORK (Reuters) - Vantiv Inc, one of the largest companies to process payments for daily fantasy sports companies, will pull out of the sector as an increasing number of states have declared the games illegal, the New York Times reported on Friday.
Vantiv lawyer Jonathan Ellman sent the company's daily fantasy sports clients a letter saying it would stop processing their wagers and payouts at the end of February, the Times said.
Vantiv could not be immediately reached for comment. Spokespersons for daily fantasy sports market leaders DraftKings and FanDuel were also not immediately available.
PayPal Holdings Inc said it was still processing payments to daily fantasy sports companies.
"We are aware of Vantiv's recent decision to discontinue processing payments for Daily Fantasy Sports services," PayPal spokeswoman Martha Cass said in a statement. "We continue to review and consider ongoing developments in relation to daily fantasy sports."
Fantasy sports started in 1980 and surged in popularity online. Participants typically create teams that span an entire season in professional sports, including American football, baseball, basketball and hockey.
Daily fantasy sports, a turbocharged version of the season-long game, have developed over the past decade. Players draft teams in games played in just one evening or over a weekend.
In recent months, the games have faced state and federal scrutiny over whether they amount to gambling.
Mississippi Attorney General Jim Hood issued an opinion on Friday saying that fantasy sports betting is illegal in his state.
The games are illegal in Arizona, Iowa, Louisiana, Montana and Washington. Attorneys general in states including New York, Illinois and Vermont have recently challenged the legality of the games.
(Reporting by Michael Erman and Suzanne Barlyn; editing by Richard Chang)