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New York Attorney General Launches Investigation into DFS!

Professionalrakeback.com Logo  When New York-based Attorney Generals decide to investigate gambling related sites, there is this initial fear among everyone as it was this kind of situation that brought about the demise of PokerStars and Full Tilt in the United States.  Luckily for FanDuel and DraftKings these investigation do not look to be as dire and may actually help provide some changes that will help recreational players feel more confident about the games in general.

New York Attorney General Launches Investigation

It has not been the best week for Daily Fantasy Sports giants FanDuel and DraftKings as a lot of players and media members are asking some tough questions about how much of an advantage their employees have when competing in other sites games; among many other things.  One under-current of worry from all of this attention though was that this scandal would bring about questions of the legality of these sites and would lead to a possible Black Friday situation that rocked the US online poker world back in 2011.  Well, with the investigation by a state’s Attorney General, part of that has happened, but the question of legality isn’t even on the table.

The Recent Scandal Overview

For those unaware, the recent scandal that broke which has called into question some of the operations behind the major DFS sites and if their employees are using inside information to gain an advantage on the competition.  An employee from DraftKings was able to gain access to information that allowed him to know what players were owned on his own sites competitions.  This allowed him to then play in a FanDuel event with that information and set his lineup in a way to best allowed him to gain an advantage over other people by picking players with low ownership rates in compeititons.  He went on to finish second in the event bagging over $750,000 in prize money for the finish.

As far as scandals go this can really be seen in two major ways.  Either it is really bad because it shows a lack of understanding about how employees of an industry can have a huge advantage on those not in the industry when playing these games.  Further, it also made some people wonder if friends of employees could be getting inside information allowing them to do better with that inside information, much like insider trading in the stock market. 

The other way of looking at this scandal is that it is not that big of a deal and it is a small scandal that could bring about some changes in how the sites operate.  So an evil that was needed to prevent an even bigger scandal in the future.  No matter how you feel about it, DFS is in the limelight now for not the best of reasons and how the industry reacts is vitally important to how the public will perceive it long-term.

The Investigation

For those who were worried about how an Attorney General might approach this kind of situation can breathe a huge sigh of relief as it does not appear that the overall legality of the sites is being challenged, even in the slightest.  The New York Attorney General Eric Schneiderman has sent letters to both of the major US-based DFS sites seeking answers to the investigation into the recent scandal, but also how data is stored, steps being taken to ensure that leaks like this don’t happen again and for the names and title of employees who compile roster data, set values for players and other vital jobs into the actual function of the player valuing functions of the site.  His investigation is also hoping to answer how much of an advantage a player could gain from inside information to better understand what safe guards sites should take in the future.

Nowhere in the letters to these sites though did Schneiderman even hint that he is looking into the legality of the sites and if they should even be able to continue to operate.  Considering that one of the sites is based in his home state this could have been an easy prosecution for him had he felt that the sites were even of questionable legality, not an easy win, but an easy prosecution.  The fact that he is taking the approach of wanting to better understand the industry and potentially help to set up safeguards for players might not set well with those who want a free market, but should at least alleviate concerns that these sites will go the way of PokerStars and Full Tilt, at least in the near future.  Players should keep an eye on the investigation to see what comes out of it, but should also play with confidence that they won’t lose their money or new hobby.

Summary

The scandal that broke and the subsequent investigation to come out of it is not fantastic as anytime you have major players from the legal and government world poking around the industry you worry about bad things can happen.  However, in terms of what could have happened and the issues that the industry could be facing this is a rather minor development and potentially could be beneficial for the industry as a whole long-term.  At any rate, players should feel safe taking advantage of the great promotions offered by each site, FanDuel and DraftKings, as they appear to be safe from shut down.  However, we still prefer to make our money grinding poker rakeback, hence the name of our website!  What are your opinions on the investigation?  Have your prospects or ideas about Daily Fantasy Sports changed in the past week?  Are you tempted to simply bet online sports in the traditional fashion now? Tell us on Twitter and Facebook!