Fantasy sports service FanDuel, which was founded in Edinburgh, has agreed to pay $1.3 million (£1m) to authorities in Massachusetts after the state’s attorney general launched an investigation into allegations of unfair and deceptive business practices.
Rival DraftKings, which had recently explored a possible merger with FanDuel, will also pay $1.3m.
FanDuel is now headquartered in New York but has about 150 people across its offices in Edinburgh and Glasgow.
The two companies are market leaders in fantasy sports, which is seen as a lucrative new market for sports fans in America, though is controversial due to what the companies perceive as a “game of skill” and the application of the country’s strict laws prohibiting online sports betting.
Fantasy football alone in the US is estimated to be around $7 billion – companies like DraftKings and FanDuel make their money by charging users fees to join and take part in contests to win cash prizes.
However, they are often a target for investigators, with Massachusetts attorney general Maura Healey investigating finding that some participants were not given adequate consumer protection.
“I am glad to have reached these settlements to address various consumer issues that existed at the early stages of this new industry,” she said.
“We have since implemented a set of comprehensive regulations that provide consumers with broad-ranging protections and that have served as a model for many other states.”
In response, FanDuel said: “We have worked closely with the Massachusetts attorney general’s office in their review of fantasy sports, including their issuance of the first set of consumer protection regulations for our industry, which we were pleased to comply with since their inception in 2016.
“FanDuel has worked tirelessly to pass laws in 16 states that solidify the fantasy sports industry and implement many of these same important consumer protections.
“FanDuel’s efforts have ensured that sports fans are able to continue playing the games they love in a safe, regulated environment and as we head into this football season, we look forward to continuing these efforts.”
The two companies paid $6m to the New York attorney general last year in seperate settlemnts of lawsuits over alleged deceptive advertising practices.