DraftKings, FanDuel Deny Insider Trading Helped Employee Win $350,000

BOSTON (CBS) - An employee at an online fantasy sports company is accused of using insider information to win a big jackpot on a rival site, putting the multi-billion dollar industry on the defensive Tuesday.

Legal observers predict the controversy will also attract more scrutiny from federal and state lawmakers.

If you've watched one snap of a NFL game this season, chances are you have spotted ads for online fantasy giants FanDuel and Boston-based DraftKings.

On Tuesday at a Brighton coffee shop, Richard Batten reacted to the latest play-by-play about allegations of insider trading. Those accusations started swirling after an employee at DraftKings won $350,000 by playing on rival FanDuel.

The winning jackpot also came on the same weekend the employee said he accidentally posted data online showing which players were being picked the most for draft lineups.

"It's sort of like the casino manager hitting a big score at the poker table. It kind of makes you wonder," said Batten, whose 22-year-old son plays the online fantasy football sites.

However, DraftKings said it conducted an internal investigation and found no wrongdoing by the employee. That investigation concluded the employee only had access to the information after player lineups were locked.

"There is no evidence that any information was used to create an unfair advantage, and any insinuations to the contrary are factually incorrect," the statement said.

Boston College law professor Alfred Yen said the controversy will only invite more scrutiny from state and federal lawmakers.

Massachusetts Attorney General Maura Healey is already on the record, saying she is taking a closer look at the online fantasy sports site. Congressional leaders are also calling for legislative hearings.

Until now, the multi-billion dollar industry has managed to sidestep the same government restrictions enforced on sports betting.

"If I had to bet, there is going to be some kind of regulation," Yen said. "It certainly puts the companies in a questionable position. Because they've already said the integrity of the game is of paramount importance. Nobody will want to play these games if they think they're rigged."

In a joint statement, DraftKings and FanDuel announced they have temporarily decided to prohibit employees from participating in online fantasy sports contests for money.

Isaac Selkow has tried DraftKings and has also played several years of the traditional season-long fantasy leagues. He wondered if the controversy is being overblown.

"It doesn't seem to be as terrible to me as it would if they won for their own company. That would seem a little more shady," Selkow said.

Boris Revsin, who has played DraftKings for about a year, believes the issue won't negatively affect player interest in the online fantasy sites.

Revsin said it makes sense that someone who works at one of the companies would be good at picking players.

"Understanding fantasy sports, doing research, reading the news, watching the games, and doing analysis has nothing to do with insider information," Revsin said. "It makes sense that someone who spends their entire day thinking about fantasy will understand how to play the game."