State AG Launches Probe into Fantasy Sports Websites

The statement is in response to the backlash FanDuel and DraftKings have received after a DraftKings employee, who had access to insider info, won $350,000 on an National Football League contest on FanDuel. They assembled fantasy professional sports teams and scored points on how players did in actual games.

The backlash was bad enough that DraftKings and FanDuel, two companies in the midst of a bitter business rivalry, released a joint statement Monday claiming employees don’t abuse company data.

The two companies said they had investigated Haskell and cleared him of wrongdoing. “But I don’t think you can debate the proposition that daily fantasy sports betting needs to be regulated”, said Joe Asher, chief executive of the USA operations for sports betting company William Hill.

“We haven’t seen anything yet, but we expect it’s probably going to be the next bubble such as the Internet sweepstakes centers”, said Brian Kongsvik, director of The Florida Council on Compulsive Gambling. However, not all states agree with that assessment-Arizona, Iowa, Louisiana, Montana, and Washington all have deemed participating in sites like DraftKings and FanDuel illegal.

These policy changes come right after the New York attorney general announced an inquiry into both DraftKings and FanDuel.

Regulators approve house rules, negotiate disputes between players and the casinos and require reserves that can pay off any unpaid wagers and future bets. Both outfits said they have policies in place to prohibit employees from using the information at their disposal-but also acknowledged that this is a murky area and they are working to ensure the integrity of daily fantasy sports.

Fantasy sports participants put together virtual teams based on real players and compete based on the players’ statistics. There have been inferences that he used valuable user data to game the system, but the companies say it’s not true.

The first action is the most obvious: FanDuel employees are now explicitly banned from playing any daily fantasy games for money, on any site. The company, along with leading competitor DraftKings, is at the center of a fraud investigation by the state of New York’s attorney general’s office. Until this week, workers had been banned from playing only at their own company sites.

ESPN said Tuesday that it’s pulling on-air segments sponsored by one of the companies implicated in a possible scandal that’s rocked the billion dollar world of fantasy sports. Until now, however, they had been free to play at other sites. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.

Major League Soccer, 21st Century Fox Inc., and Madison Square Garden have also invested in DraftKings, which raised $300 million in its most recent round of financing in July.