Business
model of daily fantasy sports under federal probe: WSJ
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[October 15, 2015]
(Reuters) - The U.S. Justice
Department and the Federal Bureau of Investigation are looking into the
business model of daily fantasy sports operators and trying to determine
whether they violate federal laws, the Wall Street Journal reported,
citing people familiar with the matter.
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Customers of DraftKings Inc have been approached by FBI agents
from the Boston office, asking them about their experiences with the
company, the WSJ said, citing a person familiar with the matter.
The probe is at a preliminary stage and no decision has been
reached. The Justice Department is trying to ascertain if daily
fantasy games are a form of gambling that are outside the purview of
the exemption, the newspaper reported.
A spokeswoman for DraftKings told the WSJ that they have no
knowledge of the specifics of any federal investigation but added
that they strongly disagree with any notion that the company has
engaged in any illegal activities.
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The fantasy sports industry has faced a firestorm of criticism since
news broke that an employee at DraftKings won $350,000 from a $25
entry in an American football contest on the rival FanDuel site
using what reports said appeared to be inside information.
Representatives at the Justice Department, FBI, DraftKings, and
FanDuel were not immediately available for comment outside regular
U.S business hours.
Fantasy sports companies FanDuel Inc and DraftKings said last week
that they had banned their employees from all daily fantasy games
and also barred staff from rival companies from their sites.
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Daily fantasy sports, which have developed in recent years, allow
participants to draft teams in games played in just one day. It has
allowed fans to bet with a frequency that some critics argue is akin
to sports betting or gambling.
FanDuel and DraftKings are privately owned and both valued at more
than $1 billion.
(Reporting by Shivam Srivastava in Bengaluru; Editing by Bernard
Orr)
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