DraftKings, FanDuel Investigations: Latest Details and Findings

Tyler Conway@jtylerconwayFeatured Columnist

FILE - In this Sept. 9, 2015 file photo, an employee in the software development department of DraftKings, a daily fantasy sports company, walks past screens displaying the company's online system stats in Boston.  Customers of the two biggest daily fantasy sports websites have filed at least four lawsuits against the sites in Oct. 2015, following cheating allegations and a probe into the largely-unregulated multi-billion dollar industry. In court papers, the customers accused the DraftKings and FanDuel sites of cheating, and argued they never would have played had they known employees with insider knowledge were playing on rival sites.  (AP Photo/Stephan Savoia)
Stephan Savoia/Associated Press

An internal investigation by DraftKings found that the employee who won $350,000 in a FanDuel competition did so without use of internal data that would have compromised the league's integrity.

DraftKings and FanDuel are now the subject of an investigation by the New York Attorney General.

Continue for updates.

FanDuel Paid Entries Temporarily Suspended for New York Residents

Tuesday, Nov. 17

FanDuel issued a statement saying it has filed for a temporary restraining order and why paid entries have been temporarily suspended for New York residents:

In FanDuel’s ongoing effort to fight for fantasy users across New York, we filed for a temporary restraining order yesterday that would allow users to keep playing on our site while the legal case was pending. The court did not issue the TRO but set a hearing for November 25th, ensuring that the legal situation will be promptly resolved.

As a result of that decision, we are temporarily suspending entry in paid contests for people located in New York as of 2:30 pm EST today, Tuesday, November 17th. This is in addition to the restrictions on deposits previously implemented. We believe that this restriction is temporary and we hope to be able to offer our paid contests to New Yorkers again very soon.

DraftKings, FanDuel File Suit to Prevent New York Shutdown

Friday, Nov. 13

DraftKings filed a lawsuit to halt New York Attorney General Eric Schneiderman's ruling banning daily fantasy sports in the state of New York, according to Curt Woodward of the Boston Globe

In its legal filing Friday, DraftKings asked the court to declare Schneiderman’s order unconstitutional and block him from attempting to take further action against the company. It also asked a judge to declare the games legal under New York law, saying they “are complex games of skill” that differ from poker and other kinds of casino-style betting.

“Today, we have taken decisive legal action to prevent a unilateral, misinformed and legally misguided attempt by the New York attorney general to act as ‘judge, jury and executioner’ for daily fantasy sports in New York,” DraftKings said in a statement.

"We have a legal business that millions and millions of people love," FanDuel said in its statement, according to Matthew Rocco of Fox Business, "and we are entitled to due process and look forward to being heard in court."

New York Attorney General Eric Schneiderman released a statement in response, according to ESPN's Darren Rovell:

Darren Rovell @darrenrovell

NY Attorney General Eric Schneiderman now says he will go to court to force DraftKings & FanDuel to stop NY business https://t.co/DKzTlUGMYd

DraftKings Retains Legal Representation

Thursday, Nov. 12

Scott Soshnick of Bloomberg News reported that DraftKings retained the Boies, Schiller & Flexner law firm in its fight against New York's attorney general.

Schneiderman informed FanDuel and DraftKings on Oct. 6 that he was launching an inquiry into the companies, per Joe Drape and Jacqueline Williams of the New York Times.

Daily Fantasy Companies Agree to Self-Regulatory Board

Tuesday, Oct. 27

Soshnick reported former labor secretary Seth Harris will chair the self-regulated board agreed upon by daily fantasy companies.

DraftKings Releases Statement Regarding Employee's Winning Lineup

Monday, Oct. 19

A statement released to David Purdum of ESPN.com indicates Ethan Haskell, DraftKings' written content manager, submitted his lineup in the competition before he received internal data.

"[Law firm Greenberg Traurig's] independent investigation has confirmed the Company's conclusion that Mr. Haskell could not possibly have entered the winning lineup based upon his receipt of the Company's non-public aggregate ownership percentage information, because he did not receive that information until 40 minutes after the lineup was locked," the statement read.

Haskell won $350,000 in a million-dollar FanDuel competition earlier this NFL season. The controversy stemmed from the possibility that Haskell received proprietary data—specifically how many competitors played each individual player—before submitting his lineup. Allegations that he had an unfair advantage launched both an internal probe and outside analysis of the daily fantasy sports enterprise.

The FBI and U.S. Justice Department are looking into the matter, per Brad Reagan and Devlin Barrett of the Wall Street Journal.

"It is entirely predictable that the government would follow up on the misleading reports about our industry," a DraftKings statement read, per Reagan and Barrett. "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."

The investigations have led to a snowball effect for DFS, which has grown exponentially in popularity. Commercials for both companies have become ubiquitous across all sports programming, and even some professional sports teams have become partners.

The results of DraftKings' investigation may help everyone move on and result in business-as-normal for DFS companies.

DraftKings CEO Jason Robins said in a statement (via Purdum):

We are very pleased that the independent investigation by Greenberg Traurig has confirmed the findings to our internal review of this matter and our conclusion that there was no improper use of information by our employee. In fact, as the investigation also concluded, it was not even possible for non-public information to have been used improperly.

However, with federal probes still pending, it's equally possible this story is far from over.

Follow Tyler Conway (@tylerconway22) on Twitter.


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