DraftKings law firm: Employee didn’t use inside information

An employee of the daily fantasy sports website DraftKings did not use proprietary data to win hundreds of thousands of dollars on a rival website, according to a law firm hired by the company.

The firm, Greenberg Traurig, said it found that Ethan Haskell, a content manager at the website, had not used DraftKings data to win $350,000 on competitor FanDuel. The employe did not possess DraftKings data related to football games played on Sunday, Sept. 27, which was the day he created his lineup on FanDuel for the same contest, according to the law firm.

{mosads}Daily fantasy sports services allow players to create virtual “teams” for a single day’s games. The prize money is substantial, with top players able to win millions of dollars.

DraftKings and FanDuel are the leaders in the booming daily fantasy industry, with each site worth more than $1 billion on paper and bolstered by investments from professional sports teams and major sports broadcasters. But the allegations against DraftKings and Haskell focused a bright spotlight on the largely unregulated sites.

The concerns about Haskell emerged when he admitted to accidentally releasing the data regarding the football games before some of them had started. Many questioned his $350,000 win on FanDuel, given that he potentially possessed data that could have given him an unfair advantage.

According to DraftKings, Greenberg Traurig’s report disputes that timeline. The law firm is said to have concluded that Haskell received the data at 1:40 p.m. on September 27 — 40 minutes after he would no longer have been able to change his virtual lineup on FanDuel.

“DraftKings is fully committed to operating our daily fantasy sports games in a manner that is completely transparent and fair for all players,” DraftKings CEO Jason Robins said in a statement. “We will also continue to work with all relevant authorities to ensure that sports fans can continue to enjoy the daily fantasy sports experience they love.”

Boston-based DraftKings retained Greenberg Traurig as the scandal over the data spiraled earlier this month. FanDuel has hired former Attorney General Michael Mukasey to review its internal practices. Both websites have banned their employees from playing on other daily fantasy sports services.

It remains to be seen whether the website’s’ own internal investigations will do enough to quiet a storm of criticism directed at them from Washington.

House Energy and Commerce Committee ranking member Frank Pallone (D-N.J.) has called for hearings on the websites, which he says are venues for gambling rather than the “games of skill” allowed under an exemption to a 2006 law blocking most types of online gambling.

An aide to the committee’s Republican majority said that the scandal raised “additional questions about the safety, fairness, and integrity of these new platforms for fan engagement.” The House Judiciary Committee is also looking at the websites, according to an aide.

Pallone and Sen. Bob Menendez (D-N.J.) have called for a Federal Trade Commission investigation into the websites because of the allegations against Haskell.

“These reports raise serious questions about the integrity of these online fantasy sports websites, and it raises the question of whether there are sufficient consumer and competition safeguards to protect the integrity of these online games,” they said at the time.