Casino Watch Focus has reported on the new insider trading scandal against the Daily Fantasy Sports (DFS) industry and has reported the constant scrutiny of the business being nothing more that sports gambling. As more and more exposure is coming to light, it appears the DFS industry has caught the ire of both the FBI and the United States Attorney General. Both have launched full-scale investigations in the business. As The Wall Street Journal explains, the FBI is looking into the matter of fantasy sports being games of skill or not:
The U.S. Justice Department and the Federal Bureau of Investigation are probing whether the business model of daily fantasy-sports operators violates federal law, according to people familiar with the matter.
The probe is in the preliminary stage, two people said. It is part of an ongoing discussion within the Justice Department about the legality of daily fantasy sites, in which customers pay entry fees to draft virtual sports teams that compete against each other for prize money based on the real-world performances of athletes. Congress in 2006 prohibited financial companies from transferring money to online gambling sites and several were shut down. But so-called games of skill were exempted. The Justice Department is trying to determine whether daily fantasy games are a form of gambling that falls outside the purview of the exemption.
Additionally, the US Attorney General is investigating the allegations of insider trading and the legality of the fantasy sports as defined by the Illegal Gambling Business Act. As previously reported by Casino Watch, insider trading type information was used by a company employee to win $350,000. Those allegations along with class action lawsuits has prompted State Department Action. An online source explains:
Whether or not operators of daily fantasy sports (DFS) are violating the Illegal Gambling Business Act (IGBA) is a question for a grand jury, which has been convened by the US Attorney’s office in Tampa, Florida to investigate the matter.
Late Friday, well-known gambling and sports law attorney with Becker & Poliakoff, a Fort Lauderdale law firm, Daniel Wallach, broke the news that has rocked the fantasy sports industry, in what has undoubtedly been the single worst week in the history of daily fantasy sports.
On Thursday a class action lawsuit was filed in a Manhattan federal court against FanDuel and DraftKings stemming from the recent revelation by both companies that their employees were allowed to participate in contests on each other’s sites for the same cash prizes available to the general population. Meanwhile, Yahoo has joined the other DFS operators and has prohibited its employees from participating in real-money DFS tournaments at rival sites.
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