FBI, DOJ investigating daily fantasy sports legality, legitimacy of UIGEA exemption

The Federal Bureau of Investigation has launched an investigation into whether daily fantasy sports (DFS) is a form of gambling that violates federal law.

On Wednesday, the Wall Street Journal quoted sources saying FBI agents had been contacting customers of DFS operator DraftKings regarding their interactions with the company. The probe is reportedly part of a larger discussion within the US Department of Justice as to whether DFS falls under the fantasy sports exemption of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). Hint: even the UIGEA’s architect doesn’t think DFS qualifies.

A DraftKings spokesperson offered a somewhat tone deaf statement to the WSJ, saying it was “entirely predictable” that the government would respond to the “misleading reports about our industry.” The spokesperson claimed no knowledge of any federal investigation but “strongly disagree with any notion that our company has engaged in any illegal activities.”

Those ‘misleading reports’ refer to the mainstream media pouncing on news of the mishandling of in-house data by a DraftKings employee and the subsequent revelation that the same employee had won $350k that same weekend playing at rival FanDuel. The ensuring uproar led both operators to (eventually) impose permanent bans on their employees playing for cash at any DFS site, followed by the hiring of of outside law firms to review each company’s in-house policies and practices.