DraftKings suspends $250m ESPN partnership
New York attorney general launches probe into DraftKings and rival FanDuel following insider trading scandal
Daily fantasy sports operator DraftKings suspended its $250m advertising agreement with ESPN yesterday as the insider trading scandal involving the firm rumbled on.
ESPN confirmed to USA Today that DraftKings had “made the decision to pull their advertising for today [Tuesday]” as coverage surrounding the data leak dominated the press.
The sports media giant also took the decision to scale back on DraftKings branding and language during its broadcasts in order to avoid the appearance of a conflict of interest.
The news comes after DraftKings and rival FanDuel moved to defend the integrity of their businesses after allegations of insider trading related to a DraftKings employee winning US$350,000 on rival site FanDuel surfaced last week.
“It is a standard procedure for us pull these kind of sponsorships and integrations when we are covering breaking news,” ESPN said. “We look to avoid any suggestion of influence on our coverage.”
In a statement released on Monday, DraftKings said it had “conducted a thorough investigation” into the data leak but found no evidence of wrongdoing. However the scandal has raised questions over the industry’s self-regulatory model.
Following the scandal New York attorney general Eric Schneiderman announced yesterday that he had launched an investigation into daily fantasy sports, and in particular whether incidents of fraud had taken place at DraftKings and FanDuel.
Schneiderman also sent letters to DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles asking a range of questions about their businesses and the data leak, and requested they respond by October 15.
New York’s probe comes after Boston attorney general Maura Healey launched a similar investigation into the legality of DFS in her state, and New Jersey lawmaker Frank Pallone called for a Congressional hearing on its “murky” legal status.
But the fallout from the scandal looks set to spread further still after Major League Baseball released a statement saying it was “surprised to learn” that DraftKings, who has a deal with the league to be its official DFS partner, had allowed its employees to take part in contests.
“Major League Baseball has a policy that prohibits players and employees from participating in fantasy baseball games in which prize money or other things of value are available to participants,” the league said in a statement.