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Report: FBI, Justice Department investigating daily fantasy sports

The FBI and U.S. Justice Department are investigating whether daily fantasy sports sites such as DraftKings and FanDuel are in violation of federal law.

The FBI and U.S. Department of Justice are investigating whether daily fantasy sports sites such as DraftKings and FanDuel violate federal law, The Wall Street Journalreports.

The investigation is still in its beginning stages, according to The Wall Street Journal. But the FBI has been in contact with DraftKings users about their experiences with the site.

In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, which prohibited businesses from accepting payments for online gambling. Online games that require skill were excluded from the act, but the Justice Department is seeking to determine whether daily fantasy sports should fall under that exemption.

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Increased attention has been placed on the operation of daily fantasy sites after The New York Timesreported that DraftKings employee Ethan Haskell admitted to leaking information about the site’s fantasy lineups during the NFL’s Week 3. The data Haskell released is made public after lineups have been finalized, but can give players an advantage if obtained ahead of time. That week, Haskell won $350,000 on rival site FanDuel from a $25 entry.

Following the report, the New York attorney general opened an inquiry into the matter, requesting information on how both FanDuel and DraftKings prevent their employees from committing fraud. Several lawsuits have also been filed against the companies.

FanDuel has said there was no evidence that any employee misused information, but both it and DraftKings have since permanently banned their employees from participating in daily fantasy sports betting.

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- Erin Flynn