There may be some major misconduct involving DraftKings and FanDuel, the two biggest daily fantasy-sports websites.
Last week, a user on a fantasy-sports forum noticed that a DraftKings employee released data on player ownership for DraftKings’ Millionaire Maker contest before all NFL games involved in the contest had begun.
Knowledge of this information could be used by savvy players to gain an advantage in a game with real money on the line, as DFS Report and Legal Sports Report explain in depth.
“It is absolutely akin to insider trading,” said Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff told the New York Times. “It gives that person a distinct edge in a contest.”
Ethan Haskell, the DraftKings employee responsible for the accidental leak, won $350,000 the same week on rival site FanDuel.
The timing of the leak and the employee’s winnings on the rival site led critics to fear that unregulated early access to this information could be a threat to the integrity of daily fantasy sports.
There is currently no concrete evidence that DraftKings or FanDuel employees are using inside information to gain an advantage in daily fantasy games.
A spokeswoman for DraftKings told The New York Times that Haskellmistakenly released the information and the company was sure that he did not use the information improperly.
Adam Krejcik, director of a research firm studying fantasy sports, told The Times that even if this particular instance were an honest mistake, “[it] certainly does not look good from an optics standpoint and it strengthens the case for additional oversight and regulation.”
The two companies, which have already been criticized for operating unregulated on a barely-legal business model, issued a joint statement to address the claims that their employees are using insider info.
Regarding the potential for fraud, the statement says:
Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.
The statement also notes that the companies aim to review internal policies and “work with the entire fantasy sports industry” on the issue in question.
The daily fantasy-sports model — which allows bets to be placed on fantasy teams chosen many times within a single season — has grown into a massive industry thanks to partnerships with MLB and the NFL, not to mention enormous marketing campaigns.
One research firm estimated that the industry would generate $2.6 billion in entry fees in 2015, according to The Times.
The reason that daily-fantasy sites get away with betting on sports outcomes is because of a 2006 law which establishes most fantasy sports as games of skill rather than chance.
As reported by Business Insider