Two fantasy- sports firms probed for cheating
NEW York's Attorney-General (AG) has opened an inquiry into real-money fantasy-sports companies DraftKings and FanDuel after reports that an employee may have used inside information to win US$350,000 (S$495,000) in a fantasy-football contest.
The inquiry came as word spread alleging that the two companies had unfairly allowed their employees - many with information not available to customers - to play at each other's sites for large amounts of money, reported The New York Times on Tuesday.
AG Eric Schneiderman sent letters to the two companies this week, saying that the allegations raise legal questions about their fairness, transparency and security, reported Reuters.
The letters asked for the names of employees who compile data on athletes as well as daily fantasy players, and whether access to the data is limited.
They also requested information from internal investigations carried out by the companies, including those concerning DraftKings employee Ethan Haskell, who is at the centre of the current scandal.
"It's something we're taking a look at - fraud is fraud," Mr Schneiderman said in an interview, Agence France-Presse reported.
The letters requested replies by next Thursday.
In the past decade, fantasy-sports websites in the United States have soared, with the participants numbering around 56.8 million, a big leap from 2005's 12.6 million.
A proliferation of sites offer fans the chance to make money by assembling fantasy American football or baseball line-ups, which then score points based on the actual performances of real athletes playing each week.
The sites say payouts can reach US$2 million.
DraftKings had earlier denied any wrongdoing on the part of Mr Haskell, who won US$350,000 from a US$25 entry in an American football contest on the rival FanDuel site.
It said the mid-level content manager had received the data in question only after he had entered his fantasy line-up on the FanDuel website.
The news of Mr Haskell's win led to a firestorm of criticism as employees are seen as gaining a potential edge by seeing how some of the best-performing participants behave before the information becomes public.
The two companies have prohibited their employees from playing in money games following the scandal.
Chris Grove, of the Legal Sports Report website, said the controversy left unanswered questions "because there's no central force articulating and enforcing minimum standards, no one entity that can credibly describe the state of the industry on these key issues".
"That is simply an unacceptable status quo when millions of players will risk billions of dollars this year on games they've been told - but can't be shown - are fair," Mr Grove stated.
Last month, Democratic congressman Frank Pallone called for a hearing to look at fantasy sports and its relationship to gambling.
"Despite how mainstream these sites have become, the legal landscape governing these activities remains murky and should be reviewed," Mr Pallone said.