Inside the Scandal Rocking the Fantasy Sports World
Earlier this week, New York Attorney General Eric Schneiderman opened an investigation into the business practices of DraftKings and FanDuel, seeking to determine whether employees at the sites won payouts based on access to internal information. In separate letters to each company obtained by the New York Times, Schneiderman demanded information on how both companies operated, their policies surrounding employee participation in fantasy games, and what access employees had to sensitive data.
And on Thursday, a class action lawsuit was filed in a federal court in New York against the two powerhouse fantasy sites, alleging that the companies “fraudulently induced” players to pay fees to participate in contests without acknowledging that employees participated in matches and had access to confidential, non-public information.
DraftKings CEO Jason Robins defended his company’s response to the data leak, saying in an interview with the Boston Globe that he runs a “very ethical company.”
An investigation of the daily fantasy sports industry, which gaming firm Eilers Research estimates will generate about $2.6 billion in entry fees this year alone, could disrupt the largely unregulated business. Lawmakers have called for hearings and Federal Trade Commission intervention into a world that walks the line between traditional fantasy leagues and online sports gambling.