Oh, Now the FBI Is Investigating DraftKings

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DraftKings logo (PRNewsFoto/DraftKings, Inc.)

DraftKings logo (PRNewsFoto/DraftKings, Inc.)

The Boston office of the Federal Bureau of Investigation is poking around the rapidly growing world of online gambling daily fantasy sports sites that allow players to wager on the individual performances of professional athletes.

The Wall Street Journal reported on Wednesday that the FBI is reaching out to interview prominent daily fantasy sports players, including users of Boston-based DraftKings. The Department of Justice is in the process of determining whether or not daily fantasy sports games fall within the scope of the Unlawful Internet Gambling Enforcement Act of 2006. In a separate report, The New York Times indicated the FBI’s investigation is primarily focused on DraftKings and the possibility the site encouraged people to play in the five states where daily fantasy sports games are illegal.

The information under review includes a post by Jon Aguiar, an executive in charge of developing high-volume fantasy players, on a public thread informing players how to deposit funds and play in contests in states and countries where the games are prohibited.

The new federal investigation into the practices of daily fantasy sports sites comes in the aftermath of an insider trading scandal that revealed employees at sites like DraftKings and FanDuel were making serious coin while wagering on other sites. The two companies have since banned the practice but not before employees pocketed no less than $10 million while playing. The practice of allowing employees to play the games on other sites was considered a perk of the job that even top level management participated in.

Massachusetts Attorney General Maura Healey was already “reviewing” the legality of the sites when the news of insider trading broke, an event that prompted further scrutiny from electeds. Treasurer Deborah Goldberg said Massachusetts should get in on the action and create its own daily fantasy sports game managed by the Lottery, of course, while House Speaker Robert DeLeo and Senate President Stanley Rosenberg raised the possibility of taxing the company to ensure the state gets its “fair share” of gaming revenue. The attorney general in New York has launched a separate investigation into the practices of daily fantasy sports companies.

Gov. Charlie Baker, in typical Baker fashion, has urged everyone to pump the brakes and wait for Healey’s report on the company to come out before making any decisions. Baker has said he is cool to the idea of the Lottery running its own daily fantasy sports games.

DraftKings issued a very defensive response to the investigations through an unnamed spokesperson:

“It is entirely predictable that the government would follow up on the misleading reports about our industry. We have no knowledge of the specifics of any federal investigation but strongly disagree with any notion that our company has engaged in any illegal activities.”

Of course, nobody would be calling any of this illegal, or investigating anyone for breaking the law if regulators just legalized online gambling outright.