New York’s attorney general has started investigating the fantasy sports companies DraftKings and FanDuel after reports that an employee may have used inside information to win $350,000 in a football contest.
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The employee received the data at 1:40 pm on September 27 – 40 minutes after the deadline for FanDuel team lineups closed, DraftKings said.
The two companies disclosed that they gave permission to their employees (several of them have data otherwise kept away from customers), to engage in play on competitor’s sites and earn large sums of money.
We have asked former federal judge and United States Attorney General Michael Mukasey to review the facts and evaluate our internal controls, standards and practices.
New York Attorney General Eric Schneiderman recently announced that he is launching an inquiry into DraftKings and FanDuel regarding which employees could have an unfair advantage when playing the other site’s contests.
Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots have also made investments in daily fantasy sports.
“I think it also should be a warning-shot to everybody that online gaming is a real scary thing and we ought to look at all of it”, said Reid, who is a former Gaming Commission head in Nevada, a hub of the industry.
FanDuel released a statement Wednesday that it has permanently banned its employees from playing on other fantasy sites.
DraftKings says there’s no evidence the employee misused the information. They likened it to insider trading of stocks.
The daily fantasy sports industry, although nearly entirely unregulated, has been slowly surging for the past year.
Justine Sacco, the FanDuel spokesperson, told Darren Rovell that DraftKings employees had won 0.3% of the winnings in the history of FanDuel.
As reported by Mashable, the companies released a joint statement, saying, “Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs”. For example, there are varying restrictions for fantasy sports in Arizona, Iowa, Louisiana, Montana and Washington.
Robins’ legal stance that daily fantasy sports leagues are not a chance-based gamble has done nothing to tamp down what has become an intensifying national debate around the country. The matter involved DraftKings and FanDuel, two companies that run online fantasy sports leagues with cash prizes.
The problem for the industry is many employees of daily fantasy companies were players first and continued to compete on other sites.
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The chairman of the House Energy and Commerce Committee, which handles gambling issues, indicated before news of the DraftKings controversy broke that it is likely to hold a hearing on the topic but not in the near-term.
