U.S. Attorney behind Black Friday investigating daily fantasy sports

Preet Bharara is at it again.

The U.S. Attorney who led the effort to shut down the U.S. online gambling industry on Black Friday in April 2011 is now investigating the legality of daily fantasy sports (DFS), according to the Wall Street Journal.

Companies like DraftKings and FanDuel that offer real-money fantasy sports games operate in the U.S. thanks to a specific exemption in the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The UIGEA made it illegal for online gambling businesses to accept payments from U.S. players, but several offshore sites, like PokerStars, Full Tilt and Absolute Poker, were able to circumvent those laws by surreptitiously coding financial transactions incorrectly, giving financial institutions the impression that the transactions were retail transactions and not gambling related. But on April 15, 2011, otherwise known as Black Friday, Bharara's office in the Southern District of New York indicted the owners of the major online poker sites, dealing a major blow to the online poker industry in the U.S.

While the news of Bharara's office investigating daily fantasy sports may draw parallels to Black Friday, there are several clear differences. As Joe Brennan, the CEO of DFS startup Fast Fantasy and former Director of the Interactive Media Entertainment & Gaming Association noted on Twitter, the U.S. Department of Justice would be hard-pressed to make a case against DFS companies under UIGEA, given the definition provided by Congress.

7/x - keep this in mind w/ rumors of SDNY investigating the "legality" of DFS. DOJ enforces laws passed by congress. It does not make law.

— Joe Brennan Jr (@joebrennanjr) October 21, 2015

8/x - DOJ does not judge the validity of a law: Federal courts do that.

— Joe Brennan Jr (@joebrennanjr) October 21, 2015

Brennan did note, however, that the Southern District of New York could look at other charges, such as fraud or violations of New York state law, in determining whether to bring a case against the sites.