Daily fantasy sports (DFS) is no stranger to the front pages of business, sports, and gambling websites, but now it is also making headlines not only for its monstrous marketing campaigns and rapidly increasing revenues but also on suspicions of employees misusing insider information.
This week it came to light that DraftKings employee Ethan Haskell had access to confidential statistics that possibly aided in him winning $350,000 at rival FanDuel.
According to various reports, the mid-level worker utilized private data to gain an unfair advantage over public DFS competitors.
In a joint statement, FanDuel and DraftKings, the two DFS leaders controlling 95 percent of the market, defended their current safeguards.
“Nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers,” the release said. “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.”
In an ironic twist, FanDuel’s online tutorial, blog, and tip guide is called the “Insider.”
Million Dollar Question
The main charge is that Haskell prematurely published data from DraftKings showing figures on his company’s weekly “NFL Millionaire Maker” contest. The statistics displayed which pro football players were chosen most frequently by DraftKings customers.
Using that information could give a bettor an inherent advantage should they opt to include less-selected players on their roster. Haskell and the DFS networks claim he received the information after the FanDuel deadline to change his lineup passed, meaning though he published the report he couldn’t have used it to his gain.
Over on FanDuel, Haskell paid the $25 entry fee for the site’s “Sunday Million.” He placed second out of nearly 23,000 entries.
Haskell chose Cincinnati Bengals’ Andy Dalton for his quarterback, a player taken by just 2.3 percent of other FanDuel users. Five of his nine players were less than 10 percent owned platform wide.
Though media outlets are having a heyday with the report, Daniel Wallach, a sports and gambling lawyer telling ESPN that the “single greatest threat to the daily fantasy sports industry is the misuse of insider information,” it’s not clear whether Haskell actually obtained an advantage.
Adam Krejcik, partner at Eilers Research, said it doesn’t constitute “pure fraud” and that money was not stolen. Jason Robins, CEO at DraftKings, echoed those sentiments saying Haskell “made a mistake in his job” but “didn’t do anything ethically wrong.”
Regardless, FanDuel and DraftKings released a second statement on Tuesday saying employees are no longer permitted to compete on either site.
“While the industry works to develop and release a more detailed policy, DraftKings and FanDuel have decided to prohibit employees from participating in online fantasy sports contests for money,” the announcement read.
The heavily covered story is unquestionably a black eye on the emerging DFS industry, especially considering many believe Congress is slowly but surely focusing its attention on the market and will debate its legality in 2016.