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The daily fantasy sports industry (DFS)—primarily FanDuel and DraftKings—is under scrutiny from the Justice Department and was banned in Nevada last week after its gaming commission ruled the online games are gambling.
The state of New York has launched an investigation, which it announced two weeks ago, after alleged “insider trading” was leading to large cash windfalls for employees.
The Missouri Attorney General’s office is not taking any action at this time, according to Press Secretary Nanci Gonder.
“The New York Attorney General is probing employees using insider information in participating in fantasy sports,” she said in a written statement.
“We have received no similar complaints nor are we aware of any employees of the companies.”
A comment was first sought on the DFS investigation in New York from the Missouri Gaming Commission on the morning of October 6. That office said the Attorney General’s office should be contacted. A call was placed to the AG’s office that morning.
After several more attempts over more than a week to contact the state AG’s office, in which the press office was informed of the Justice Department and Nevada Gaming Commission actions, an email from Gonder was received on Friday, October 16.
A.G. Burnett, chairman of Nevada’s Gaming Control Board, said an internal investigation of DFS sites began a year ago and its findings led to the involvement of that state’s Attorney General.
After the AG’s office responded with its opinion, the Gaming Board slapped FanDuel and DraftKings, which have a combined worth of more than $1 billion, with cease and desist orders.
It says the businesses cannot operate in Nevada unless they “apply for and are granted the requisite gaming license.”
“Based on these analyses, I, along with Board staff, have concluded that DFS constitutes gambling under Nevada law,” Burnett said in a statement last week.
He added that he thinks there could be a “domino effect,” in which states (including Missouri) that have taken no action against the DFS industry examine if it is gambling and in violation of state statutes.
“Owners” on these sites assemble fictional teams of professional players and pay fees to enter contests. Some payouts can top $1 million based on games conclude and athlete performances.
In a written statement, FanDuel said it is “terribly disappointed” by the Nevada ruling.
“This decision stymies innovation and ignores the fact that fantasy sports is a skill-based entertainment product loved and played by millions of sports fans.”
It has not challenged the ruling and “regrettably” was “forced to cease operations in Nevada.”
Draft Kings also released a statement, which read in part: “We strongly disagree with this decision and will work diligently to ensure Nevadans have the right to participate in what we strongly believe is legal entertainment that millions of Americans enjoy.”
