Report: DOJ, FBI enter preliminary stage of investigating daily fantasy

The U.S. Department of Justice and FBI are in the preliminary stage of an investigation into daily fantasy sports operators, according to a report from The Wall Street Journal.

The newspaper, citing an anonymous source, reported Wednesday night that FBI agents from the Boston office have been contacting customers of daily fantasy operator DraftKings. The Department of Justice reportedly is looking into whether daily fantasy sports is a form of gambling. Daily fantasy operators have been persistent about it being a game of skill and point to language in the Unlawful Internet Gambling Enforcement Act of 2006 in regards to their legality.

"It is entirely predictable that the government would follow up on the misleading reports about our industry," a DraftKings spokesperson said in a statement. "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."

Rival daily fantasy operator FanDuel declined comment.

The FBI and Department of Justice are the latest to take a look at daily fantasy sports. New York Attorney General Eric Schneiderman has launched an investigation and requested internal data from DraftKings and FanDuel. The information from the two industry giants is due Thursday.

U.S. Congressman Frank Pallone and U.S. Sen. Robert Menendez have asked the Federal Trade Commission to investigate daily fantasy sports, and, according to two legal sources, a federal grand jury in Florida has convened to review DFS.

The increased scrutiny was jump-started last week, when a DraftKings employee accidentally published data revealing which players were included on the most rosters for an NFL DFS contest. The same weekend, the employee finished second in a contest on FanDuel, winning $350,000.

DraftKings has denied the employee had access to the data prior to submitting his lineup and, along with FanDuel, has since banned employees from participating in public fantasy contests for money.

Four class-action lawsuitshave been filed this week, with three filed against both DraftKings and FanDuel, while one involves just DraftKings.