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Daily fantasy sports sites ordered to shut down in Nevada

Last Updated Oct 16, 2015 1:25 AM EDT

LAS VEGAS -- Nevada regulators have ordered daily fantasy sports sites like DraftKings and FanDuel to shut down, saying they can't operate in the state without a gambling license.

The decision comes amid growing backlash by investigators and regulators over the sites, which have grown in popularity in the past year.

The sites insist they are skill-based games and not chance-based wagers, and are therefore not subject to gambling regulations.

Customers pick daily lineups of players in professional football, basketball, hockey and more, and they compete with other players to earn the most points and win money -- in some cases more than $1 million.

The state's Gaming Control Board issued a notice Thursday saying the sites must stop offering their contests to Nevada residents effective immediately.

Operators face felony fines and 10 years in prison. Regulators say the sites can apply for licenses.

Other states that allow gambling are closely watching the developing situation with the daily sites.

A DraftKings spokesperson issued a statement to CBS News Thursday night saying, "We strongly disagree with this decision and will work diligently to ensure Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy. Unfortunately, we now have to temporarily disable our product for our thousands of customers in Nevada in order to be compliant in all jurisdictions."

A FanDuel statement Thursday night said, "On behalf of our users in Nevada, FanDuel is terribly disappointed that the Nevada Gaming Control Board has decided that only incumbent Nevada casinos may offer fantasy sports. This decision stymies innovation and ignores the fact that fantasy sports is a skill-based entertainment product loved and played by millions of sports fans.

"This decision deprives these fans of a product that has been embraced broadly by the sports community including professional sports teams, leagues and media partners.

"We are examining all options and will exhaust all efforts to bring the fun, challenge and excitement of fantasy sports back to our Nevada fans. In the interim, because we are committed to ensuring we are compliant in all jurisdictions, regrettably, we are forced to cease operations in Nevada."

Editor's note: CBS has an investment in FanDuel of less than 1 percent of that company's value.