DraftKings says outside investigation clears employee of wrongdoing
Daily fantasy sports company DraftKings said an investigation by a former U.S. Attorney has cleared an employee of allegations similar to insider trading.
The Boston-based startup on Monday published a summary of an investigation led by attorney John Pappalardo of Greenberg Traurig, LLP, a downtown law firm. DraftKings retained Greenberg Traurig after conducting its own internal review, the company said.
According to the DraftKings summary, Pappalardo found that “it was impossible’’ for DraftKings content manager Ethan Haskell to have used internal information at DraftKings to help him win money on FanDuel, a New York-based company that offers very similar contests.
The possibility that Haskell had utilized DraftKings data to win at FanDuel exploded into a major scandal for the industry earlier this fall, after Haskell accidentally published the data and then won $350,000 playing FanDuel the same weekend.
But according to the summary, Haskell did not receive the information until 1:40 p.m. on the day of the incident. At that point, he had been unable to adjust his lineup at FanDuel for 40 minutes.
DraftKings had previously offered this explanation, saying an internal review found Haskell innocent. The outside investigation—which DraftKings says was based on interviews, documents, emails, data, and more—“has confirmed the company’s conclusion,’’ according to the summary.
A DraftKings spokesperson said the company would not release the full report, or disclose what it paid for the investigation. The spokesperson said Greenberg Traurig has been advising DraftKings on its internal policies and practices.
The incident stirred questions that have lingered even after DraftKings cleared Haskell of wrongdoing about the fairness of the games, the companies’ internal controls, and industry best practices. DraftKings and FanDuel have since announced bans on employees competing in any paid daily fantasy games.
The incident also brought calls from officials for regulations and investigations. In Massachusetts, Attorney General Maura Healey said she was concerned by what had happened, and that her “focus is on ensuring that there are proper consumer protections in place.’’
The industry has faced additional scrutiny over its own legality under state and federal gambling laws. FanDuel has launched a petition to urge lawmakers to keep the games legal.
DraftKings and FanDuel saw their number of paid entries fall slightly this past NFL weekend, according to industry tracker SuperLobby.com. Usership decreased by about 10 percent for DraftKings and about 3 percent for FanDuel from the previous weekend. The previous weekend had seen both companies set entry records—despite being the first weekend after the scandal boiled over into mainstream news coverage.
The best bars for watching the Patriots:
[bdc-gallery id=”109509″]
To comment, please create a screen name in your profile
To comment, please verify your email address
Conversation
This discussion has ended. Please join elsewhere on Boston.com