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New York Attorney General Investigating FanDuel and DraftKings for Potential Fraud

Daily Fantasy Sports site DraftKings and FanDuel are being investigated by the New York State Attorney General.

New York attorney general Eric Schneiderman has launched an inquiry into daily fantasy sports sites DraftKings and FanDuel after the New York Times reported that a DraftKings employee won $350,000 playing on FanDuel. The employee, written content manager Ethan Haskell, also published data showing what players were showing up on most rosters. The rub: if Haskell knew which players were most sought after, he could then exploit that information to choose different players, thereby minimizing the canceling-out effect of playing against the same players on his own roster. With the ability to field multiple teams, this could be, and was, quite profitable. It's like Moneyball, but using inside information to exploit market inefficiencies.


DraftKings said it launched it's own investigation into Haskell's use of the information and claimed in a statement that he did not have access to the information until 40 minutes after rosters were supposedly locked. DraftKings and FanDuel also released a joint statement saying they are doing everything above board. Both outfits said they have policies in place to prohibit employees from using the information at their disposal—but also acknowledged that this is a murky area and they are working to ensure the integrity of daily fantasy sports. DraftKings has temporarily prohibited their employees from playing on other sites, while FanDuel has prohibited their employees from playing on any site, and says it will prohibit employees from other sites from playing at FanDuel.

Nevertheless, the office of the New York attorney general sent both companies a letter demanding certain information. Specifically, the office wants both companies to identify by name, title and job description, the employees responsible for, among other things, compiling stats and ownership percentages, and determining the prices for individual athletes. The letter also asks for an explanation of where the data is held and how it is safe guarded from being exploited by employees.

"It's something we're taking a look at — fraud is fraud," Mr. Schneiderman said in a radio interview early Tuesday before the inquiry was announced. "And, consumers of any product, whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can't commit fraud."

In addition to information regarding Haskell, the letter to FanDuel specifically mentions Matthew Boccio, who runs Product Operations at FanDuel. According to one of the sites who first uncovered the Haskell information, Boccio is a Top 50 (out of over 20,000) daily fantasy sports player. Boccio has apparently collected all of his winnings since June. FanDuel told DFS Report that Boccio didn't have access to the type of information Haskell had, but it's unclear whether his knowledge of player pricing data gave him an advantage.

Identical copies of the letter—apart from Boccio's inclusion to FanDuel—were sent to both companies, which you can read below.