The Wall Street Journal is reporting that the FBI and Justice Department have begun investigating the Daily Fantasy Sports industry:
FBI agents from the Boston office have been contacting customers of DraftKings Inc. to ask them about their experiences with the Boston-based company, one person familiar with the matter said. The probe is in the preliminary stage, two people said. It is part of an ongoing discussion within the Justice Department about the legality of daily fantasy sites, in which customers pay entry fees to draft virtual sports teams that compete against each other for prize money based on the real-world performances of athletes.
This felt like an inevitable step amidst all the stories about the possibility of insider trading, so to speak, of the past couple weeks — and the ensuing state-level investigations and class action lawsuits. There will be a lot of jockeying in this industry over the next several months, and it’s far too early to speculate where the chips will fall with regard to legality and/or regulation.
Disclosure: our site is owned by USA Today Sports, which also owns Daily Fantasy Site FantasyScore.