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More Trouble For Daily Fantasy Sports

Saturday October 10,2015 : MORE TRAVAIL FOR DAILY FANTASY SPORTS
 
Federal Grand Jury convened in Florida, and a new class action in Illinois.
 
The troubles keep mounting for the beleaguered daily fantasy sports industry with developments late Friday including the convening of a federal Grand Jury in Florida, and the filing in Illinois of another class action against market leaders Fanduel and DraftKings.
 
Twitter and online sports media reports revealed that a class action similar to that launched in New York earlier this week by a Kentucky resident  was filed in an Illinois federal court, citing FanDuel and DraftKings, and that Judge Gregory H. Woods has been assigned to the case.
 
Wallach Legal tweeted that the US Attorney's Office in Tampa, Florida is additionally investigating DFS operators for violations of federal law (IGBA) and Florida law (849.14), and that a Grand Jury has been convened.
 
The IGBA is a law enacted before the DFS industry arose and is mainly designed to curb gambling operations that fund mafia families. It makes it unlawful to bet on the result of a trial or a contest of skill.
 
Federal grand juries, which can comprise 16 to 23 jurors, require that at least 12 grand jurors find probable cause in order for an indictment to be issued. Whilst not in and of itself a conviction, Grand Jury proceedings are bad publicity and can discourage players from supporting a business that may be found to be illegal.
 
They tend to be lengthy affairs, hearing testimony from witnesses and delving deeply into the activity and backgrounds of those they are investigating.
 
Some observers have already pointed out the collateral damage a Grand Jury investigation can inflict, such as withdrawals of sponsorship, funding, investment, partnership and advertising support.
 
Other developments Friday included a statement from new DFS market entrant Yahoo advising that it has banned its employees from playing real-money DFS contests at rival sites.
 
And DraftKings partner, the National Hockey League, announced that it is extending its current ban against its players participating in DFS activity to league employees in general.
 
Over at DraftKings, the three founders, CEO Jason Robins, Matt Kalish and Paul Liberman, were clearly in damage control mode as they sent personally addressed emails to probably millions of DFS players in what appeared to be an effort to reassure them.
 
The communications contained little that has not already been reported in the extensive media coverage this week as the ":insider" crisis deepened, and focused on reassuring players that the "...fairness and integrity of our contests has been at the heart of everything we have built since we started the company three and a half years ago."
 
It goes on to reiterate that its investigation into the Haskell affair has found no evidence of wrongdoing, but observed that the issue has encouraged the company to "re-evaluate our processes," and details the hiring of an external law firm to conduct a full review.
 
"In addition to this audit, we have put in place a set of core measures that we believe are central to this process," the trio advise, reiterating that the company has prohibited its employees from taking part in any DFS activity for monetary prizes, and that this ban extended to employees from rivals trying to play on DraftKings.
 
The company is also "actively reviewing" its organisational structure and will add resources to ensure compliance with all recommendations stemming from internal and external findings. It is also working with multiple third parties to strengthen all internal policies and procedures.
 
The email concludes with the observation:
 
"You will no doubt continue to hear from the media about both DraftKings and the industry. It is our prerogative to keep driving that conversation ourselves. We will work to respond to your concerns in complete transparency and to inform you of the steps we are taking to inspire your full trust.
 
"Please know how grateful we are for the passion and loyalty you have shown DraftKings throughout our history and especially over the past week. You remain our greatest priority."



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