October 19, 2015 / 7:39 PM / 2 years ago

DraftKings: Employee who won $350,000 did not use inside info

NEW YORK (Reuters) - DraftKings said on Monday that an independent investigation found that an employee who won $350,000 on rival fantasy sports website FanDuel did not use nonpublic information to pick his team's lineup.

The investigation, by the Greenberg Traurig LLP law firm, determined that it would have been impossible for Ethan Haskell to use nonpublic information regarding lineups in DraftKings fantasy games to get an edge when the Sept. 27 FanDuel lineup was entered, DraftKings said.

The probe showed that Haskell did not gain access to nonpublic information with player ownership percentages in DraftKings lineups until 40 minutes after the lineup in the FanDuel contest was locked, DraftKings said.

Haskell ultimately won the second prize in the FanDuel $5m NFL Sunday Million contest, the company said.

News of Haskell's $350,000 win has led to allegations that fantasy sports employees gained an unfair advantage against other players on rival sites.

The fast-growing companies - DraftKings and FanDuel are each valued at more than $1 billion - allowed employees to play at other sites until the news broke.

Since then, DraftKings and FanDuel have banned their employees from playing at any sites, hired former U.S. Attorneys to conduct internal probes, and pledged to strengthen controls and policies.

New York Attorney General Eric Schneiderman opened an inquiry into the incident on Oct. 6.

Schneiderman said allegations that employees had access to data kept from other participants raised legal questions about fairness, transparency and security, and representations to customers.

The attorney general asked for responses to a wide range of questions by Oct. 15, but neither his office nor the companies have commented on the answers.

The U.S. Justice Department and the Federal Bureau of Investigation also are reportedly looking into the business model of sports fantasy companies and trying to determine whether they violate federal laws.

Participants in the fast-growing games, which have evolved from season long leagues to weekly and daily contests, pay entry fees to draft virtual teams to play against each other for money based on player performance in real games.

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