DraftKings Says Hired Law Firm Confirms No Wrongdoing
LAS VEGAS (AP) — A law firm hired by DraftKings to investigate claims an employee used valuable inside information to win a $350,000 second-place prize on a competing daily fantasy sports site contest confirms that didn't and couldn't have happened.
The Boston-based daily fantasy sports company released a short two-page summary Monday saying it would have been impossible for the employee to use the information to win on FanDuel because he didn't receive the helpful data until 40 minutes after that site's contest closed. The companies' employees aren't allowed to bet on their own sites but until recently could play on competing sites.
The investigation was led by the former U.S. Attorney for Massachusetts, now with firm Greenberg Taurig, and confirmed DraftKings' own earlier internal review.
When the allegation jumped from online message boards to front pages, the unregulated daily fantasy sports industry had already begun attracting scrutiny from regulators, lawmakers and observers inundated by advertisements promising to make millionaires out of players competing on the sites.
The claim of possible insider trading raised questions beyond the single incident, including who has access to internal information and when, and what consumer protections were in place.
Major League Baseball, an investor in the site, expressed surprise at the time that employees were known to play on competing sites. Shortly after the story surrounding the employee caught fire, DraftKings and FanDuel both announced they were changing their policies to bar employees from playing on competing sites.
DraftKings, when they announced Greenberg Taurig would investigate the incident, said the firm had already been retained to review the company's policies and procedures. The results of that review haven't been made public, yet.
Chris Grove with site LegalSportsReport.com which has been closely tracking daily fantasy sports industry developments, said at the time the employee allegations at DraftKings wasn't the story.
"The lack of a coherent, transparent system for ensuring fairness, the inability of the industry to provide credible answers, and the sheer amount of money being risked by players within this system is the story," he said. "This one incident is just the first genuine peek into the attitude sites take toward these critical issues."
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