Wall Street Journal has reported that Preet Bharara, US Attorney for the SDNY - Southern District of New York - was investigating if DFS operators, such as, DraftKings and FanDuel, were in violation of Federal law. Just recently word has spread that the US Department of Justice has its sights upon the DFS industry.
The Investigation into SDNY are in the early stages, and the senior DOJ lawyers who are based in Washington, are reportedly sitting on the fence on whether DFS violates the Federal gambling law. A violation of the New York law would be sufficient to invoke the Federal Illegal Gambling Business Act, this is the same strategy that a US Attorney based in Florida is said to be employing in a completely separate investigation.
Attorney Daniel Wallach has pointed out a specific portion of the New York’s Penal Law 225.00 in which an IGBA violation might be hinged. The law prohibits anyone profiting from: any contest, or game or a gaming scheme that the outcome depends on to a material degree with an element of chance, notwithstanding that the skill of the contestant could be a factor.
Mr Bharara’s involvement would probably send shivers down the spines of the DFS execs. Throughout this controversy that has recently plagued the DFS industry, the company executives have stuck rigidly to their story that the DFS is not illegal gambling because it is game of skill; this same argument is voiced by online poker companies that Mr. Bharara indicted on Black Friday.
Mr. Bharara’s entry into this situation will encourage mainstream media coverage, and also bring political pressure to bear for the imposition of regulatory order on the DFS sector.
Apart from the criminal investigations, numerous Washington politicians are pressing for hearings in to the DFS industry. DraftKings have hired so me high-priced help with Morgan Lewis lobbyists, Gary Slaiman, Gary Gallant and Matt Miner. And in Boston DraftKings hired the former Massachusetts attorney general Martha Coakley, on a consultancy basis.