The Feds are watching.
After last week's news of a DraftKings content manager using insider information to win $350,000 on rival site FanDuel, the New York Attorney General's office opened an inquiry into both daily fantasy sports sites, and a regular fantasy player filed a lawsuit alleging fraud against each company.
That's after last month's news of Congress reviewing the legal status of fantasy sports and sports gambling overall.
Now, the growing scrutiny has made it up to the United States Department of Justice and FBI. According to the Wall Street Journal, both are investigating whether the sites' business models are violating federal law. In particular, FBI agents from Boston have been reaching out to DraftKings players to gather information about their experiences.
This latest probe — and the inquiries made before — can pave the way toward daily fantasy sites like DraftKings and FanDuel, and fantasy sports overall, to be federally-regulated. That could threaten the way that the daily fantasy sites — each valued at over $1 billion and giving out millions in weekly prizes — currently operate.
After increased scrutiny via the New York Attorney General's office inquiry and Congressional investigation before it, DraftKings fully expected the government's involvement.
"It is entirely predictable that the government would follow up on the misleading reports about our industry," a DraftKings spokesperson said in a statement, as reported by ESPN. "We have no knowledge of the specifics of any federal investigation but strongly disagree with any notion that our company has engaged in any illegal activities."
According to the Journal, DraftKings has hired an investigator to review undisclosed allegations against one of its employees. As previously reported, FanDuel has hired an outside investigator to review its internal controls.
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