New York's attorney general on Tuesday sent letters to daily fantasy sports websites DraftKings and FanDuel demanding they turn over details of any investigations into their employees, saying they "may have gained an unfair, financial advantage in a contest known as Daily Fantasy Football."
The letters were prompted by media reports that a DraftKings employee may have had access to valuable company data before winning second place in a FanDuel contest. The incident has been likened to insider trading.
Attorney General Eric Schneiderman, in opening his investigation, said DraftKings and FanDuel employees may have exploited their access to nonpublic data.
"These allegations, and your company's subsequent statement, raise legal questions relating to the fairness, transparency, and security of FanDuel and the reliability of representations your company has made to customers," Schneiderman wrote to FanDuel.
He sent a nearly identical letter to DraftKings.
An internal review by Draftkings showed the employee concerned "could not possibly have used the information in question to make decisions about his FanDuel lineup," Draftkings said in statement. There's no evidence that the information led to the DraftKings employee's win, and a FanDuel spokeswoman said she did not believe there was an attempt to manipulate the contest.
Schneiderman wants the companies to explain their policies or practices prohibiting employees from playing daily fantasy sports, whose participants put together virtual teams based on real players and compete for points based on the players' statistics.
In the letters, Schneiderman asked for the names, job titles and descriptions of employees who compile and aggregate data including pricing algorithms and athletes' ownership percentages for past contests.
On Monday, DraftKings and FanDuel posted identical joint statements on their websites saying nothing is more important to them than "the integrity of the games we offer to our customers."
"Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs," they said.
As the controversy reverberated Tuesday, ESPN said it was cutting sponsored DraftKings elements from within its shows. It called the removal a standard procedure when "covering significant news, to avoid any suggestion of influence on our coverage." It said it was not cutting DraftKings commercials.
NBC Sports Group and NBC's parent company Comcast are among the investors in FanDuel.