Greenberg Glusker litigation partner Ricardo Cestero was quoted in a Law360 article, Daily Fantasy Sports Industry Could Fall Apart After Scandal, (subscription required), addressing a customer class action filed against the two biggest daily fantasy sports (DFS) websites, DraftKings and FanDuel.

The scandal, in which a DraftKings’ employee is accused of accidentally leaking nonpublic, insider data – the same week he won $350,000 playing on rival FanDuel – is compounded by federal and state investigations of the companies.

The article also notes that in addition to the government probes, recent reports suggest the FBI is taking a closer look and that a federal grand jury is being convened in Florida to investigate possible criminal charges.

Commenting on the issues facing these companies, Cestero says,

"I think that is the bigger concern for these fantasy sites is that some of these governmental investigations result in criminal charges and the threat of accounts being frozen." In terms of other issues relating to risk he notes, "Just the threat of it is a risk because it will be a disincentive for people to put money or keep money in those accounts. That is a bigger concern from a PR and legal perspective."

Cestero goes on to say even the threat of the company and user accounts being frozen could have an impact on DFS companies' bottom line, as it may encourage users to pull their money out and deter new users from opening accounts.

How this will play out? Will the DFS industry survive? Stay tuned ….

Greenberg Glusker litigation partner Ricardo Cestero was quoted in a Law360 article, Daily Fantasy Sports Industry Could Fall Apart After Scandal, (subscription required), addressing a customer class action filed against the two biggest daily fantasy sports (DFS) websites, DraftKings and FanDuel.

The scandal, in which a DraftKings’ employee is accused of accidentally leaking nonpublic, insider data – the same week he won $350,000 playing on rival FanDuel – is compounded by federal and state investigations of the companies.

The article also notes that in addition to the government probes, recent reports suggest the FBI is taking a closer look and that a federal grand jury is being convened in Florida to investigate possible criminal charges.

Commenting on the issues facing these companies, Cestero says,

"I think that is the bigger concern for these fantasy sites is that some of these governmental investigations result in criminal charges and the threat of accounts being frozen." In terms of other issues relating to risk he notes, "Just the threat of it is a risk because it will be a disincentive for people to put money or keep money in those accounts. That is a bigger concern from a PR and legal perspective."

Cestero goes on to say even the threat of the company and user accounts being frozen could have an impact on DFS companies' bottom line, as it may encourage users to pull their money out and deter new users from opening accounts.

How this will play out? Will the DFS industry survive? Stay tuned ….