New York Attorney General Eric Schneiderman yesterday "began an inquiry ... into the prospect that employees of daily fantasy football sites have won lucrative payouts based on inside information not available to the public," asking DraftKings and FanDuel for a "range of internal data and details on how they prevent fraud," according to Drape & Williams of the N.Y. TIMES. DraftKings and FanDuel "allowed their employees -- many with information not available to customers -- to play at each other’s sites and win large amounts of money." Schneiderman's move "may shed light on the inner workings of the sites." The companies "have until Oct. 15 to respond." Schneiderman also "demanded that the companies turn over details of any internal investigations into their employees" (N.Y. TIMES, 10/7). U.S. Rep. Frank Pallone Jr. (D-N.J.), who last month expressed a desire to look into the relationship between sports leagues and the DFS industry, said in a statement, "With little legal oversight and deep investments into these sites by the same professional sports leagues that oppose traditional sports wagering, these issues are ripe for congressional review" (BOSTON GLOBE, 10/7). U.S. Sen. Harry Reid (D-Nev.) when asked if Congress should examine the sites' legality said, "Yes, and I think it should also be a warning shot to everybody that online gaming is a real scary thing and we’d better look at all of it" (HUFFINGTON POST, 10/7). NBC’s Ron Mott said the “controversy is poised to linger with billions of dollars and now credibility at risk” (“Nightly News,” NBC, 10/6). DraftKings yesterday pulled its advertising from ESPN amid the questions around the DFS industry (THE DAILY).
WAKE-UP CALL: In Boston, Borchers, Woodward & Adams in a front-page piece report DraftKings is "discovering that with the big time comes intense scrutiny." The entire DFS industry "faces the most serious challenge of its brief existence at a time when the stakes are sky-high." N.Y.-based attorney and Fantasy Sports Trade Association member David Klein said, "The two big players, in an effort to become number one, are shooting themselves in their collective feet. The appearance of impropriety is something you don’t want to deal with" (BOSTON GLOBE, 10/7). ESPN.com's Darren Rovell reported FanDuel and DraftKings employees up until yesterday "were allowed to play on rival sites for money." FanDuel Dir of Communications Justine Sacco said that the company's internal data "showed that DraftKings employees won" 0.3% of the money the company "has awarded in its history" (ESPN.com, 10/6). A DENVER POST editorial states barring employees from betting on any site "should have been an elementary precaution to protect the integrity of the games for outside participants." If fantasy companies "don't take the hint and institute measures to ensure a level playing field for all, they'll be inviting government intervention and regulation." The editorial: "And at that point deserve it, too" (DENVER POST, 10/7). SPORTSBUSINESS JOURNAL recently examined the "curse of too much skill" in DFS.
CALLS FOR REGULATION: CBS News legal analyst Rikki Klieman said the danger for the DFS industry in addition to fines is "big-time regulation, and if it goes further, the danger could really be indictments” (“CBS This Morning,” 10/7). USA TODAY's Nancy Armour writes the DFS industry "has two choices right now: Take the steps to regulate itself in strict and transparent fashion or start writing goodbye notes" (USA TODAY, 10/7). L.A. Times columnist Bill Plaschke said the federal government "needs to get involved” and noted these games “are dominated by a small percentage of sharks, with thousands and thousands of entries who pounce on many, many minnows." Plaschke: "These are unfair games.” Denver Post columnist Woody Paige said called for both regulation and a Congressional investigation. Paige: "With the involvement of the media and all the networks and all the local stations, I think you’ve got a serious problem here” ("Around The Horn," ESPN, 10/6). But CNBC’s Eamon Javers said there “really is no indication who would be in charge of regulating” the industry (“Power Lunch,” CNBC, 10/6).
CUT TO THE CHASE: DFS player Cory Albertson and partner Ray Coburn have won "million-dollar first prizes on FanDuel and DraftKings" and were recently the subjects of a documentary titled, "Living the Fantasy." Albertson in a special to the WALL STREET JOURNAL writes, "Let’s cut to the chase here: Playing daily-fantasy sports games for money is gambling. And it should be regulated." He added, "Operators like FanDuel and DraftKings have resisted my suggestions on ways they could be proactive about policing their own businesses, choosing instead to pursue breakneck growth. More outside oversight of daily fantasy sports has become inevitable and is needed" (WALL STREET JOURNAL, 10/7). In S.F., Ira Boudway writes under the header, "Daily Fantasy Sports Industry Falls Under Cloud Of Suspicion" (S.F. CHRONICLE, 10/7). ESPN.com's Rovell & Purdum answered the "seven biggest questions on the DraftKings data leak" (ESPN.com, 10/6). In Las Vegas, Chris Kudialis writes the scandal has "caused national outrage against the relatively new and largely unregulated industry" (LAS VEGAS REVIEW-JOURNAL, 10/7). Also in Las Vegas, Case Keefer writes the scandal has "shocked the national sports scene into a discourse over customer safety and fairness in the fledgling industry." But the controversy was "hardly surprising enough to elicit a raised eyebrow from anyone involved with sports books in Las Vegas." DraftKings and FanDuel are "facing the exact type of situation that casino executives portended over the last few years since the websites’ meteoric rise without the buffer of government regulation" (LAS VEGAS SUN, 10/7).
