DraftKings and FanDuel Formally Ban Employees from Playing Fantasy for Money

In a story on the matter earlier this week, the New York Times likened such access to insider trading.

The inquiry comes after an employee at DraftKings won $350,000 from a $25 entry in an American football contest on the rival FanDuel site.

But research done by Sports Business Daily shows that just 1.3% of players took home about 90% of the winnings in the first half of the fantasy baseball season.

The world of fantasy sports has become embroiled in controversy due to allegations of company employees using insider information to turn the tables in their favor.

The companies say he did not and that there was no wrongdoing. However, there are a few who say daily fantasy sports sites are a form of gambling.

The question going forward: Will DraftKings and/or FanDuel change their respective advertising – or slow down total ad spending – as a result?

Schneiderman is asking the two companies for details on their internal fraud prevention practices as well as the names and job descriptions of any employees who handle data that could be considered an advantage in playing the game, according to letters the office sent to each company on Tuesday. However, it was something its company had addressed since the beginning, through working on charters with the Fantasy Sports Trade Association and implementing strict punishments for anyone who was caught misusing information, including termination.

Still, the companies said they have made a decision to prohibit employees from participating in online fantasy sports contests for money while the industry develops a more detailed policy. Employees of both companies were disallowed from playing in fantasy sports until an industry policy on data access was established.

The DraftKings employee allegedly used the data that cited the percentage of fans who selected certain players. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it. However, we continue to review our internal controls to ensure they are as strong as they can be. DraftKings and FanDuel also released a joint statement saying they are doing everything above board. Bob Ley, the host of “Outside the Lines” said that even though the regular advertisements will be continued to air on the network for all daily fantasy websites, it would not be running individual segments that are sponsored by these websites.

The scandal involving DraftKings and FanDuel could bring calls for greater government oversight of the industry if not calls for an outright ban on the games. It also permanently banned its employees from playing any fantasy games for money on any site. Until now, however, they had been free to play at other sites.

Major League Soccer, 21st Century Fox Inc., and Madison Square Garden have also invested in DraftKings, which raised $300 million in its most recent round of financing in July.