Attorney: Federal grand jury in Tampa investigating fantasy sports operators

Published Oct. 11, 2015

TAMPA — A South Florida attorney says a federal grand jury is investigating whether fantasy sports companies are violating a law originally enacted to target gambling ventures that enrich mafia families.

Daniel Wallach, a gaming law attorney with the firm Becker & Poliakoff in Fort Lauderdale, first released news of the Tampa grand jury inquiry on Twitter late Friday. In an interview Saturday, he would not say how he knew about the investigation. He said he does not represent anyone involved.

It remains unclear if federal prosecutors are targeting a specific company or the industry as a whole. Wallach said he did not know. A spokesperson with the U.S. Attorney's Office for the Middle District of Florida could not be reached for comment.

Wallach said the grand jury is looking into possible criminal violations involving the Illegal Gambling Business Act of 1970. While originally intended to curb gambling involving organized crime, the act has "broad sweep" and could be used in the prosecution of a variety of gaming operations, he said.

"Everyone's taken it as given that Florida is a safe haven for fantasy sports," he said. "But nothing could be further from the truth."

News of the grand jury comes at what is already a troublesome time for the multibillion- dollar fantasy sports industry. The New York Times reported a week ago that an employee of the online company DraftKings used insider information to place a bet on FanDuel, a competing website, and won $350,000.

The newspaper reported DraftKings confirmed employees of both companies had won cash playing on other fantasy sites.

Participants, who usually must pay a fee to enter, draft teams of real professional sports players. Entrants then compete using the real-life statistics generated by the sports players. Winnings, the New York Times said, can approach $2 million.

Any federal prosecution under the 1970 gambling law, Wallach said, would have to be based on an underlying violation of state law.

Wallach has argued in a legal analysis he has published online that Florida poses more risk for the industry than many other states. Florida law, Wallach noted, specifically prohibits betting on "contests of skill."

In 1991, then-Florida Attorney General Robert Butterworth wrote an advisory opinion concluding Florida law "prohibits the operation and participation in a fantasy sports league whereby contestants pay an entry fee for the opportunity to select actual sports players to make up a fantasy team whose actual performance statistics result in cash payments from the contestants' entry fees."

But Wallach said there have been no Florida prosecutions of fantasy sports operators since Butterworth issued that opinion.

"As more money flows into fantasy sports and the character of the games begin to more closely resemble gambling (rather than an informal social game,) the risk of criminal prosecution heightens," Wallach wrote in a prescient Sept. 13 analysis. "As unlikely as that may seem to many, all it takes is one aggressive prosecutor…"

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Contact William R. Levesque at or (813) 226-3432. Follow @Times_Levesque.