New York Attorney General Launches Audit of Daily Fantasy Sports

on October 8, 2015
New York Attorney General Eric Schneiderman DFS DraftKings FanDuel

Daily fantasy sports has a lot of answering to do after New York Attorney General Eric Schneiderman opened an initial inquiry into the operations of DraftKings and FanDuel. (Image: Andrew Burton/Getty Images)

New York Attorney General Eric Schneiderman’s office has opened an official inquiry into daily fantasy sports (DFS) leaders DraftKings and FanDuel to determine whether employees “may have gained an unfair, financial advantage in a contest.”

The audit comes just days after it was revealed DraftKings content manager Ethan Haskell topped nearly 230,000 other DFS players to win $350,000 on rival FanDuel in a weekly NFL fantasy game.

It’s alleged that Haskell utilized data from his employer’s platform to decide which players to buy for his roster on FanDuel, an enormous advantage in daily fantasy competitions.

“Fraud is fraud,” Schneiderman said Tuesday. “Whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can’t commit fraud.”

FanDuel and DraftKings were quick to respond, though attesting no laws were broken, they did announce staff members would no longer be permitted to participate in DFS contests.

Show Me the Data

It’s unclear when Haskell accessed the statistics on which NFL players were chosen, the answer to that question the lead component in determining whether violations were committed.

In a letter to the two DFS platforms, Schneiderman requests a series of answers stemming from how data is compiled and stored, accessed, and transmitted.

He also requests the operators to “describe in detail the incident surrounding the use of information by Ethan Haskell” and “any and all actions” the networks used to respond.

The scandal has already produced consequences. ESPN announced it was reducing its association with DraftKings by canceling specific segments sponsored by the DFS platform, though the channel confirmed it would continue to air DraftKings’ countless commercials.

The National Basketball Association, part owner of FanDuel, and Major League Baseball, minority owner of DraftKings, expressed concerns as well and stated they are in contact with the organizations.

MLB and NBA does not allow its players or employees to participate in any fantasy leagues or sports betting.

DFS Goes PR

Daily fantasy sports companies haven’t been shy of the public eye, their marketing spots inundating commercial breaks at a nearly agitating rate. But now DraftKings and FanDuel, the two operators controlling 95 percent of the DFS market, are in crisis mode.

Both websites have announced sweeping changes. In addition to banning employees from participating, DraftKings and FanDuel have hired legal teams to review their practices and offer suggestions to adopt to better their perceived cultures.

FanDuel also announced it will be forming an internal advisory board to provide “on-going advice, recommendations and guidance to ensure that we are always taking every step possible to ensure the integrity of our site and our games.”

The public embarrassment couldn’t come at a worse time as the DFS market’s recent ascent in popularity has also garnered questions of legality from lawmakers and observers.

One major player with vested interests is PokerStars’ owner Amaya, the company that recently rolled out its own DFS platform, StarsDraft. “Amaya and StarsDraft fully support, and are launching active efforts to work with state regulators to enact legislation regarding the adoption of state regulations that safeguard players,” Amaya declared.

In the end, the fantasy of DFS becoming a culturally accepted form of entertainment in America might just get slapped back to reality.