NY opens inquiry into fantasy sports companies

New York Attorney General Eric Schneiderman sent letters to the two big players in fantasy sports, saying that the allegations raise legal questions about the fairness, transparency and security of the companies, according to copies of the letters provided by his office.

The letters ask for the names of employees who compile data on athletes as well as daily fantasy players, whether access to the data is limited, and other information.

The letters also ask about policies prohibiting or restricting employees and others associated from playing daily fantasy sports. They request replies by Oct. 15.

The inquiry comes after an employee at DraftKings won $350,000 from a $25 entry in an American football contest on the rival FanDuel site.

The news led to a firestorm of criticism as employees are seen as gaining a potential edge by seeing how some of the best-performing participants behave before the information becomes public.

FanDuel and DraftKings, two privately owned industry leaders, are both valued at more than $1 billion.

Representatives New York-based FanDuel did not immediately respond to requests for comment. DraftKings issued a statement saying "We have just received and reviewed the letter from the N.Y. attorney general, and the company will fully cooperate with the inquiry."

A number sports and sports broadcasting companies have either direct stakes in fantasy websites or promotional agreements with them. ESPN announced Tuesday that it will cut elements of its broadcast sponsored by DraftKings out of its shows, but not the commercials it airs between broadcasts, according to the Associated Press

Daily fantasy games have also come under fire recently for their similarities to gambling. Current law states that fantasy betting is not legally considered gambling because it is a game of skill, not luck, according to Time.com.

The fantasy games began with groups of fans playing against one another for fun over a full season, according to the New York Times, which explained that players created fantasy teams and scored points based on how players performed in real games.

Companies such as the two under investigation operate with a similar concept except that the online games are daily and weekly, and fans pay the sites an entry fee from 25 cents to $1,000. Prize pools can pay out $2 million to the winner.

Al Jazeera with wire services