NEW YORK (CBSLA.com/AP) — New York's attorney general sent letters to daily fantasy sports websites DraftKings and FanDuel on Tuesday demanding they turn over details of any investigations into their employees amid public outcry for greater regulation in the nascent fantasy sports industry.
The letters were prompted by media reports that a DraftKings employee may have had access to valuable company data before winning a $350,000 prize in a contest run by rival FanDuel. The data pertained to which NFL players were being drafted the most by fantasy participants.
On Monday, both companies told The New York Times that they had temporarily prohibited their employees from playing in money games.
Fantasy sports participants put together virtual teams based on real players and compete based on the players' statistics. The use of privileged company information to pick players is considered by experts to be on par with insider trading, since the employees essentially make the market for players.
"It is tantamount to insider trading," which would greatly harm the industry, said Daniel Wallach, a sports betting law expert based in Florida.
What's more, many critics of the sites have recently said the sites should be considered illegal gambling operations.
But company executives say an exemption to a 2006 federal law allows fantasy sports to operate legally, since they are considered games of skill rather than games of luck.
The companies responded to the outcry on Monday with a joint-statement that said there's no evidence anyone misused internal company data.
"Nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers," the statement said. "Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs."
New York Attorney General Eric Schneiderman on Tuesday asked for the names, job titles and descriptions of employees who compile and aggregate data including pricing algorithms and athletes' ownership percentages for past contests.
He wants the companies to explain their policies or practices prohibiting employees from playing daily fantasy sports.
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