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DraftKings employee wins $350,000 on FanDuel, prompting DFS insider information concerns

6 Oct 2015

By Dan Podheiser
A scandal in the daily fantasy sports (DFS) world has raised questions about whether or not the industry, currently unregulated, needs some form of government oversight.

The story began when RotoGrinders forum user "colinwdrew" posted that DraftKings employee Ethan Haskell had inadvertently released player ownership data for the site's Week 3 Millionaire Maker tournament on Sunday, Sept. 27 at 2:30 p.m. EST, before the 4 p.m. slate of NFL games had begun. This data, showing the percentage of ownership for each NFL player in DraftKings lineups, is regularly posted after all games in a given contest have started and all lineups are locked.

Access to ownership data would theoretically provide a large benefit to someone wishing to use that information to gain an edge in DFS contests. While DraftKings employees are prohibited from playing contests at DraftKings, they are allowed to play on other DFS sites. And in Week 3, Haskell won $350,000 in a contest on FanDuel.

There is no evidence or formal accusation against Haskell that connects his leaking of DraftKings ownership data to his win on FanDuel. However, the incident has raised concerns about the possibility of an employee of a daily fantasy sports site using this data to gain a competitive advantage in a similar fashion.

The story was even picked up by the mainstream media, as the New York Times reported on the issue on Tuesday. In that piece, a sports and gambling attorney called Haskell's actions "absolutely akin to insider trading."

On Monday, DraftKings and FanDuel released a joint statement on the matter, saying "nothing is more important" than the "integrity of the games we offer."

"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," the statement said. "Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it."

ESPN, which has a marketing agreement with DraftKings, announced that it has "removed sponsored elements from within shows" during Tuesday's Outside the Lines program.

Though deemed by many to be a form of gambling, fantasy sports is not considered gambling by the federal government, thanks to a special exemption in the Unlawful Internet Gambling Enforcement Act of 2006. DFS is therefore not regulated by the federal government and not subject to oversight by a regulatory body.

The Fantasy Sports Trade Association's "Paid Entry Contest Operator Charter" serves as the only outside oversight for companies in the DFS industry, according to Legal Sports Report.
 
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