Preet Bharara Set To Join Probe Into Daily Fantasy Sports Market
The blows keep coming for the once undisputed heavyweight players in the daily fantasy sports market. The question is if these seemingly endless attacks in the past few weeks are the beginning of the end of the DFS sector or just a major correction which was bound to happen.
There are those comparing the current state of affairs in the DFS sector to the dark times in the online poker world in 2011 which culminated in Black Friday when the federal government shutdown PokerStars, Full Tilt Poker and Absolute Poker.
A new report in the Wall Street Journal will certainly give the DFS operators a “blast from the past” which they will certainly not want a repeat of. The WSJ is reporting that Preet Bharara will be part of the increasing bodies that are set to investigate DFS. Bharara is the U.S. Attorney in the Southern District of New York who orchestrated the downfall of the online poker market in the US in 2011 in what was dubbed as Black Friday.
Bharara’s reputation precedes him as has been dubbed as “the enforcer of Wall Street” by Fortune. Some of his recent work includes taking down digital currency criminals like Silk Road. The snowball effect of the leaked report that a DraftKings employer gained insider information to win $350,000 has resulted in the biggest scandal the DFS market has seen to date.
Bharara will probe DraftKings and FanDuel to see just how much skill is involved in their competitions. The key to the legality of DFS is whether the outcome of the competitions require some sort of skill or simply luck which would mean it falls under the definition of gambling.
FanDuel has yet to comment on the report of Bharara joining the barrage of investigators but DraftKings did release a statement. They said,” We strongly believe the games on our site – and daily fantasy sports in general – are legal. We recognize our responsibility to the millions of fans who are captivated by the excitement and interactive nature of daily fantasy sports to make sure they can continue to play the game they love. Ensuring a level and fair playing field for all players is a fundamental tenet of our company, and we are committed to working with all relevant authorities to ensure that our industry operates in a manner that is completely transparent and fair for all consumers. We are seeing a number of state regulators and other authorities taking a reasoned and measured approach to the daily fantasy sports business and hope that trend continues along with due consideration for the interests of sports fans across the country who love to play these games.”
Regardless of what DraftKings CEO Jason Robins says publicly, the last month could not have been worse for the DFS sector and one can only imagine what the coming months will bring.