Scrutiny of daily fantasy sports grows

Published 1:48 pm Saturday, October 17, 2015

LAS VEGAS — As more states scrutinize the daily fantasy sports industry, the office of Nevada’s attorney general said it used DraftKings’ own words and online images as evidence the sites qualify as gambling.

A day after Nevada regulators ordered the sites out of the state unless they get a gambling license, a memo issued Friday cited a three-year-old online “Ask Me Anything” interview on Reddit.com where the office of the state’s attorney general said DraftKings CEO Jason Robins compared his site to a casino and described the concept as a mashup between poker and fantasy sports. The memo also pointed to text attached to images on DraftKings’ website that used the word “betting” to describe it.

DraftKings and others in the fantasy sports industry, including competitor FanDuel, have insisted their sites aren’t gambling and are legal under a 2006 federal law that exempted fantasy sports from an online gambling prohibition.

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“It appears that although the sites’ representatives publicly state that they do not believe daily fantasy sports involve ‘wagers’ or ‘bets,’ they do use the terms ‘betting’ and ‘wagering’ when they are not dealing with law enforcement agencies,” the memo noted.

A transcript of the interview that remains online doesn’t identify Robins by name but an introduction indicates the three men who started DraftKings were answering the questions.

DraftKings did not immediately respond to requests for comment.

In less than two weeks, the two high-profile companies in the ever-growing industry had gone from being a seemingly unstoppable, untouchable force to facing intense scrutiny of their business practices and legality from investigators, lawmakers, regulators and even their own players after it was revealed employees often played on competing sites, raising questions about possible insider information being used to win.

Nevada’s determination is being watched by other states and lawmakers weighing whether the sites constitute gambling or not based on their own laws.

Participants on the unregulated sites can compete in games involving professional or college sports, paying an entry fee that goes into a larger pool. They try to assemble teams that earn the most points based on real-life stats in a given period with a certain percentage of top finishers earning a payout.

Entry fees on DraftKings range from 25 cents to more than $5,000. Some prizes top $1 million.

Neither DraftKings or FanDuel have said if they’ll pursue a license in Nevada, a process that costs $500 up front as well as hourly costs and travel expenses to cover the intense background investigation by state agents into the companies and their leaders.