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New York attorney general launches probe into DraftKings and FanDuel

Eric Schneiderman

New York Atty. Gen. Eric Schneiderman is interviewed on the floor of the New York Stock Exchange on Aug. 21, 2014. 

(Richard Drew / Associated Press)

New York’s attorney general is looking into possible unfair advantages employees of DraftKings and FanDuel may have when competing in daily fantasy sports competitions on websites other than those of their employers.

Atty. Gen. Eric Schneiderman sent letters to both companies on Tuesday, asking for details of any investigations into employees who “may have gained an unfair, financial advantage in a contest known as Daily Fantasy Football.” 

Schneiderman wants to know who compiles and has access to data and other inside information about the companies’ games and the people who play them. In addition, ESPN reports, he would like to find out how that data is stored and protected as well as policies on sharing that information.

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The letters came hours after both companies temporarily barred their employees from playing daily fantasy sports on any site, and issued a joint statement defending the integrity of their industry.

On the same day, ESPN announced that it was removing DraftKings sponsorship from elements within its shows but would still air the company’s commercials. The network said in a statement that the move is standard when “covering significant news, to avoid any suggestion of influence on our coverage.” 

Last week, DraftKings employee Ethan Haskell admitted to inadvertently releasing company data that showed which NFL players were most used in lineups submitted to a site contest called Millionaire Maker. Haskell won $350,000 on FanDuel that same week.

After investigating the incident, DraftKings said Haskell’s roster was locked on FanDuel 40 minutes before he received the information from his own company. Still, there is growing concern that some employees may be using the data of their company to win prizes in contests offered by a competitor -- with some likening the practice to insider trading.

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“These allegations, and your company’s subsequent statement, raise legal questions relating to the fairness, transparency, and security of FanDuel and the reliability of representations your company has made to customers,” Schneiderman wrote to FanDuel in a letter nearly identical to one he sent to DraftKings.

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