DraftKings has "received a subpoena from U.S. Attorney Preet Bharara’s office asking for information about an employee’s activities and potential misuse of inside data," according to sources cited by Berzon & Futterman of the WALL STREET JOURNAL. The subpoena, which seeks information on DraftKings employee Ethan Haskell, comes "despite an assertion by an investigator hired by the company" that Haskell "couldn’t have used inside information to win a big fantasy game" on FanDuel. Sources said that the investigation "is at an early stage." It comes as Justice Department lawyers in DC are "undecided on whether daily fantasy-sports betting violates federal gambling statutes" (WALL STREET JOURNAL, 10/22). SI.com's Michael McCann wrote the probe by Bharara could "motivate DraftKings, FanDuel and other DFS companies to rethink their legal strategies." Bharara’s involvement also "could prove to be most ominous sign yet for the DFS industry." He has an "intimidating track record of successful prosecutions against gaming companies and against well-financed businesses on Wall Street" (SI.com, 10/21).
APPEALING TO THE MASS: In Boston, Adams & Borchers in a front-page piece note Massachusetts legislative leaders and gambling regulators signaled yesterday that state oversight of the fantasy sports industry is "increasingly likely, saying they would scrutinize the operations" of companies such as DraftKings with "an eye toward safeguarding consumers." The Massachusetts Gaming Commission "will discuss the issues at its next public meeting, on Oct. 29, as other states also step up their scrutiny of fantasy sports games." Massachusetts Attorney General Maura Healey is conducting a similar review, and House Speaker Robert DeLeo said that her "findings, as well as those from the gambling commission, will probably guide the Legislature as it considers whether to require DraftKings and its competitors to submit to state oversight and inspection" (BOSTON GLOBE, 10/22).
TAKING A STEP BACK: USA TODAY's Brent Schrotenboer reports in light of recent developments, DFS operator StarsDraft "has pulled out of all but four U.S. states where it believes the law is firmly on its side: Kansas, Maryland, Massachusetts and New Jersey." Amaya VP/Corporate Communications Eric Hollreiser, whose company owns StarsDraft, in a statement yesterday said, "We believe that the regulation of daily fantasy sports in America is inevitable because it is the right model to protect consumers, create a viable, long-term marketplace and provide appropriate oversight and taxation." Schrotenboer notes Amaya is a "large international gaming company that has a much different risk calculus than FanDuel or DraftKings." But Amaya "also had reason to worry based on history." The company owns online poker sites that "were shut down" in '11 when the federal government "cracked down on online gambling and seized their assets" (USA TODAY, 10/22).
