DraftKings and FanDuel Accused of Fraud in Class Action Lawsuit Stemming From Scandal

By on October 19, 2015

A class action lawsuit filed in federal court accused two of the largest daily sports fantasy websites, DraftKings and FranDuel, of misrepresenting the fairness of their online sports fantasy contests.

The complaint alleges that employees of both companies may have participated in contests offered by competitor sites with the unfair advantage of using their company’s proprietary data

The lawsuit claims that “DraftKings performs analytics to determine winning strategies, return on investment of certain strategies and even how lineups on FanDuel would do if they were entered into DraftKings contests.” In other words, DraftKings employees are accused of using insider information to win against FanDuel customers.

The lawsuits came on the heels of a broadly publicized scandal stemming from the underlying facts, and the increased scrutiny on the largely unregulated of daily sports fantasy businesses.

Also, New York Attorney General Eric Schneiderman announced an inquiry into DraftKings and FanDuel to determine if employees of those companies used proprietary data to gain unfair advantages in daily sports fantasy competition hosted by competitors. Specifically, Schneiderman’s sent letters to the CEPs of FanDuel and DraftKings requesting lists of employees who collect player data and other relevant information.

DraftKings and FanDuel announced that they would permanently prohibit employees from participating in contests on competitor sites and other daily sports fantasy sites.

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