FanDuel, DraftKings: AG warns of “rigged casino”
ALBANY Government regulation may be needed to oversee daily fantasy sports giants FanDuel and DraftKings to ensure they are not “a rigged casino,” Attorney General Eric Schneiderman warned Thursday.
The New York attorney general opened an inquiry into the betting sites Tuesday after reports raised questions about the insider information available to the companies’ employees.
The sites quickly banned employees from playing daily fantasy games for money and hired law firms to review their internal controls. But Schneiderman questioned whether FanDuel and DraftKings can effectively conduct their own internal investigations.
“There’s nothing here to govern how their employees use the data, how they use the data, and the potential for abuse and fraud are tremendous when you have no regulations at all,” Schneiderman said on CBS This Morning.
He said, “I know that they want fan confidence restored so people continue to place bets. No one is going to place bets if they think it’s a rigged casino. So it’s in everybody’s best interest.”
But Schneiderman said he would probe the sites’ internal control to ensure there is no fraud and abuse in an industry with millions of users and billions of dollars at stake.
His office sent separate letters Tuesday to the companies’ CEOs that requested a trove of data and information about which employees have access to certain internal statistics and what policies the companies have in place about betting on each other’s sites.
They have until Oct. 15 to respond.
The move came after reports that a DraftKings employee had access to aggregate company data about DraftKings NFL rosters and won $350,000 on FanDuel the same week.
The sites can operate under a 2006 federal law that allows paid fantasy sports games, but the attorney general said those laws may need to be revisited.
“I think they are going to come up with their own rules and protocols very quickly to try and restore public confidence, but I also think that end of the day we are going to see to government regulation,” Schneiderman continued. “This is a big business that did not exist when the statute on Internet gambling was passed, and it was given an exemption under circumstances that really don’t apply today.”
FanDuel said in a statement Wednesday that it has hired former U.S. Attorney General Michael Mukasey “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.”
DraftKings, meanwnile, has hired the firm Greenberg Traurig, led by former U.S. Attorney John Pappalardo to review its policies.
“It’s our job to ensure that as our company grows, so does our ability to ensure that our fans can be confident in the sanctity and integrity of every game, every day,” FanDuel’s statement said.
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