There are at least 1.3 billion reasons why the operators of DraftKings and FanDuel are beginning to sweat. The two largest daily fantasy sports companies were each valued at $1.3 billion this year by the investment community. Both companies, fueled by hedge funds, investment firms, billionaires, and professional sports leagues, were considering initial public offerings sometime in 2016. That path met a roadblock.

The Gaming Control Board issued a “cease and desist” order two weeks ago to the daily fantasy sports sites, saying the activity was the definition of sports wagering under Nevada law. Until they are licensed by the state and face regulation, the sites are no longer allowed to accept wagers from customers located in Nevada.

Wells Fargo Securities gaming analyst Dennis Farrell Jr. said the fallout of the Nevada ruling put daily fantasy sports operators in a tricky position. DraftKings and FanDuel, which control more than 90 percent of the market, have not applied for a Nevada gaming license.

“It is not the end of the world, but losing a state whose cornerstone is the gambling industry speaks volumes, not just because of the gambling nature of the state, but its influence on others,” said Farrell, who wrote an in-depth research report explaining daily fantasy sports to the firm’s clients.

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