New York Attorney General Launches Inquiry into FanDuel and DraftKings

Joseph Zucker@@JosephZuckerFeatured Columnist

Draftpot co-founder and CEO Joey Levy, foreground, works with co-founder and CTO Joshua Hughes, center, and co-founder and developer Jessica Vandebon at the Fantasy Football operation's workspace, Wednesday, Sept. 30, 2015, in New York. After starting up from their dorm rooms at Columbia University earlier this year, the operation paid out $220,000 in it's first week online. (AP Photo/Julie Jacobson)
Julie Jacobson/Associated Press

The New York attorney general's office asked FanDuel and DraftKings on Tuesday to reveal their fraud-prevention measures and provide the attorney general with select internal data in an inquiry into the potential of employees using inside information while playing select money games, according to Joe Drape and Jacqueline Williams of the New York Times.

The Times also uploaded a copy of the official letter sent from New York Attorney General Eric T. Schneiderman to FanDuel CEO Nigel Eccles, which you can view here.

FanDuel released a statement on Wednesday mentioning its role in Schneiderman's inquiry:

We have asked former federal judge and United States Attorney General Michael Mukasey to review the facts and evaluate our internal controls, standards and practices. His mandate is to conduct a review to identify ways that we can ensure we are doing the right things to maintain the trust we have with our players. He will have the freedom and authority to look at any areas he thinks appropriate. We will ask him and his team at the law firm Debevoise & Plimpton to develop a set of recommendations for us to adopt and to highlight any areas where our controls can be strengthened.

This development comes after Ethan Haskell, a content manager for DraftKings, won $350,000 during a $25 buy-in Week 3 contest on FanDuel. According to Drape and Williams, Haskell inadvertently released DraftKings lineup data ahead of that week, which potentially gives a competitive advantage to players when building a roster for weekly competition.

Following internal investigations, FanDuel and DraftKings said in a joint statement neither Haskell nor any other employee was guilty of abusing his or her position in the companies to benefit financially:

Nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers. Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.

Drape and Williams also reported members of the United States Congress may look into the legal exemption that currently allows FanDuel and DraftKings freedom from stricter federal regulations.

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