The regulatory repercussions from the fantasy sports “inside information” scandal could soon be forthcoming for daily fantasy sports companies DraftKings and FanDuel. After news broke that employees of the companies with access to non-public information have been winning large sums of money by playing on rival sites, the integrity of daily fantasy sports has come under attack.
Fan outrage may soon lead to regulatory action, however, as New York Attorney General Eric Schneiderman has now sent a letter to both DraftKings and FanDuel demanding more information on employees access policies.
Unhappy Sponsors
In the wake of the scandal, major daily fantasy sports sponsors such as Major League Baseball and Walt Disney Co DIS’s ESPN network have distanced themselves from DraftKings and FanDuel.
MLB, which is a part owner of DraftKings, issued a statement clarifying that it does not allow its players to participate in fantasy baseball games involving money and “did not know that the situation was different at DraftKings.”
ESPN “Outside the Lines” host Bob Ley reported on air that the network will no longer run DraftKings- or FanDuel-sponsored segments.
New York Probe
In a letter sent to both DrafKings and FanDuel, Schneiderman has demanded that the companies turn over the names, job titles and descriptions of employees who have had access to data that could have been used to gain an advantage in fantasy sports. In addition, he is demanding access to any information gained from internal investigations that are underway at both companies.
What’s Next?
According to data curated by findthecompany.com and sourced from VentureDeal, DraftKings has raised a total of $626.3 million in funding in recent years; FanDuel has raised $357.3 million, for a combined total of nearly $1 billion in investor funding.
It’s too early in the investigation process to make any predictions about what, if anything, will ultimately result from a regulatory standpoint. For now, fans, players and investors are simply watching and waiting.
Disclosure: The author holds no position in the stocks mentioned.
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