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New York attorney general demands DraftKings, FanDuel documents over employee betting scandal

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DraftKings and FanDuel are coming under investigation from the New York attorney general about their regulation of employees' use of inside information.

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DraftKings and FanDuel are coming under the scrutiny of the New York attorney general after a report Monday that a DraftKings employee won $350,000 on a FanDuel daily fantasy contest while potentially having access to information that shouldn't have been available to him, according to the New York Times. Attorney General Eric Schneiderman wrote letters to both companies demanding names, job titles and descriptions of employees who compile data that could be used to gain a personal advantage.

Schneiderman also demanded that the companies turn over the results of any internal investigations. That includes inquiries into Ethan Haskell, the "mid-level content manager" who accidentally published information about how often players were being used in lineups in DraftKings' "Millionaire Makers" game before it should have been publicly available. He won a Week 3 contest on FanDuel.

Both companies said they investigated Haskell and cleared him of wrongdoing.

The two companies have come under scrutiny for a host of reasons, from the overwhelming number of ads they paid for to promote their services during commercial breaks to the gray area they created about whether they should be considered a form of illegal online gambling.

Schneiderman commented on the scandal surrounding Haskell earlier in the day. Via the New York Times:

"It's something we're taking a look at — fraud is fraud," Mr. Schneiderman said in a radio interview early Tuesday before the inquiry was announced. "And, consumers of any product, whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can't commit fraud."

Since the Haskell news broke, sponsorship partners of both DraftKings and FanDuel have pulled some of their support. DraftKings removed its advertising off ESPN's airwaves. Bob Ley of ESPN's Outside the Lines said that the network will continue to run ads for daily fantasy games, but will no longer run individual segments sponsored by the companies.

Major League Baseball released a statement reiterating that its employees are prohibited from participating in fantasy games in which money is at stake, and that it didn't know that DraftKings had a different policy. The NFL declined to comment.

In its defense, DraftKings released a statement saying that Haskell would not have had access to player utilization data until after lineups had to be locked in. It said that it found no evidence that Haskell did anything wrong. DraftKings and FanDuel have forbidden employees from playing for money at their competitor's site. Both companies had already had policies in place forbidding from playing for money using their own company's services.

Disclosure: SB Nation has a partnership with FanDuel to produce content about daily fantasy sports and advertise their games.