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2 big fantasy sports companies respond to cheating concerns

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NEW YORK — Two of the biggest companies in the $1.5 billion business of fantasy sports, DraftKings and FanDuel, responded Monday to claims that employees had used inside information to place their own bets.

The companies issued a joint statement saying: “Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs.”

The New York Times reported that a DraftKings employee had admitted to accidentally leaking confidential data last week.

A forum on RotoGrinders, a fantasy sports media site, includes a post that appears to be from an employee in which he apologizes for posting information in error.

The potential for cheating set off alarm bells for a fast-growing business with little formal regulation and big money at stake. DraftKings alone expects to pay out close to $2 billion in prizes this year.

The statement released by the companies says there is “no evidence” internal data at DraftKings or FanDuel was misused.

Billion-dollar business

DraftKings and FanDuel are the largest players in the fantasy sports industry behind three big names: ESPN, Yahoo and CBS.

FanDuel was started in 2009, and DraftKings in 2012. They have achieved multi-billion dollar valuations from investors.

Each firm recently raised about $300 million in financing, which they’re using to blanket stadiums with ads.

Between them, the two companies have sponsorship deals with 28 of the 32 NFL teams, worth an estimated $6 million to $7 million to the teams, according to research firm IEG.

Sports leagues, team owners and media companies have invested in the growing fantasy sports business.

For example, Major League Baseball and the National Hockey League have equity stakes in DraftKings, and the National Basketball Association has equity in FanDuel. Time Warner, the parent company of CNN, has made an investment in FanDuel.

Although the National Football League itself has not taken a stake in either company, a number of NFL and NBA team owners have invested in FanDuel.

And DraftKings recently signed a deal with the NFL Players Association to use current players in broadcast, print, social media, digital and mobile ads. The NFLPA declined to comment Monday.

Little regulation

Fantasy sports has been criticized by some for getting close to the line of illegal sports gambling. Though federal law permits fantasy sports, some say it should be regulated.

DraftKings and FanDuel say they’re willing to work with competitors on self-policing.

“We also plan to work with the entire fantasy sports industry on this specific issue so that fans everywhere can continue to enjoy and trust the games they love,” their statement said.