Fantasy Aces, a fantasy sports operator, has found itself the target of a New York Gaming Commission investigation following the operator’s filing for bankruptcy at the end of January.
The operator is reportedly unable to pay its players’ winnings derived from bets placed on sporting events throughout the country. The team has hired criminal defense attorney Robert J. DeGroot to address the commission’s inquiries regarding how Fantasy Aces’ situation became so dire and the whereabouts of its players’ funds.
As one of eight states to pass gaming legislation on Daily Fantasy Sports (DFS) last year, the New York Commission is charged with overseeing the regulation of every operator granted license to do business in the state of New York, one of which was Fantasy Aces.
One of the provisions of the legislation was that operators needed to keep players’ funds segregated from operational costs. It is now clear Fantasy Aces failed to abide by that order. It is apparent to regulators that Fantasy Aces management committed wired fraud by intermingling operational costs with players’ funds. Their hiring of a criminal defense attorney only reinforces their knowledge of this act.
According to the Wall Street Journal, Players are reportedly owed $1.3 million. However, an account owned by Fantasy Aces, designated “Players’ Account”, holds only $2,419. The operator reported assets of $1.8 million and liabilities of $2.96 million. The company’s holdings and property will be liquidated to fulfill its obligations to creditors.
The newspaper included a report stating that, “Earlier this week Fantasy Draft, a rival site that had been close to purchasing the Fantasy Aces just prior to its application for bankruptcy, announced that it would step in to cover the players’ balances, a gesture, it said, would “preserve the lifeblood of the industry.”
The Fantasy Aces attorney, DeGroot, did not respond when asked for comment by the Wall Street Journal. However, the team’s enlisted bankruptcy lawyer, Richard Marshack, did say it was apparent the company failed to maintain a segregation between player funds and operational funds.
A quote from DeGroots personal website attested that while all accounts for the company are currently on hold, “we [will] work with the bankruptcy court in finding the fastest possible solution for our players.”
Spokesman for the Gaming Commission Lee Park did confirm that Fantasy Aces was currently being investigated for non-compliance with New York State gaming laws, but did not go into further detail. He added, “Any further action that might be taken is under review pending developments in bankruptcy court to protect contest patrons.”
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