While the sites have opted not to do business in a handful of states, including Washington, where regulators have made clear they're not welcome, they have been up and running in a number of others -- like New York -- where they're legally dubious. Several states in which the companies are operating have laws similar to New York and Washington, while a few, such as Tennessee, Arkansas and Vermont, have even stricter prohibitions.
That could pose more risk than the companies or their backers -- big media companies and professional sports leagues -- have let on. Federal law criminalizes gambling businesses that operate in violation of state law, with penalties that can include prison time, fines and seizure of assets.
"This creates a real vulnerability for the industry," said Daniel Wallach, a sports and gaming lawyer in Florida. "That statute gives the government the power to take it all away. They can shut you down."
