New York attorney general investigates DraftKings and FanDuel

New York’s attorney general has started investigating the fantasy sports companies DraftKings and FanDuel after reports that an employee may have used inside information to win $350,000 in a football contest, the Guardian reported.

Eric Schneiderman sent letters to the two big players in fantasy sports, saying that the allegations raised 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.

Earlier Reuters reported that Major League Baseball said it was surprised to learn that fantasy sports operator DraftKings, in which it has an equity investment, allowed its employees to participate in contests and has reached out to the company to discuss the matter.

Daily fantasy sports, which have only been developed in the past few years, allow players to draft teams in games played in as little as one day. This has allowed fans to bet with a frequency that some critics argue is akin to sports betting or gambling and led to the rise of the two privately-owned industry leaders, FanDuel and DraftKings, both valued at more than $1 billion. Most popular games they offer are American football and baseball.