United States sports fantasy firms defend integrity after insider bet

A spokesman for DraftKings acknowledged that employees of both companies have won big jackpots playing at other daily fantasy sites.

FanDuel PR rep Justine Sacco previously told Tech Insider that “more of our users are sports fans than anything else and they play because it is a sports entertainment product”. The success of the teams is ultimately based on an average of the individual sports players’ performances throughout the season, so data are invaluable in the competition.

But it is no secret in the daily fantasy industry that the kind of information the employee tweeted out could be used to draft fantasy teams that include players that aren’t in widespread use in any given contest.

According to Legal Sports Report, that information could give a massive edge to any daily fantasy player, but as of yet, no one has directly between Haskell’s win to having any additional information. However, these sites have no rules about their employees using other sites, meaning that a situation like what happened with the aforementioned DraftKings employee isn’t against any company rules. Critics have complained that the setup is hardly different from Las Vegas-style gambling that is normally banned in the sports world.

DraftKings and FanDuel said they had policies in place to guarantee employees did not misuse information at their disposal.

“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 companies added. Getting it early, however, is of great advantage to make tactical decisions, especially when your opponents do not have the information at all.

A DraftKings spokeswoman said that Haskell had simply made a mistake, the Times said. “The nature of the industry is so specialized and so new that at the speed which they grew they relied heavily on the player population”. If the employees design the algorithms to price the players effectively why wouldn’t thye reverse them to their own benefit?

The fantasy industry generated over $2.5 billion this year, and is estimated to generate over $14 billion by 2020, the New York Times also reported.

Jason Robins, chief executive of DraftKings, has moved to distance daily fantasy sports (DFS) from sports betting, stating that the majority of fantasy customers in the USA do not take part in sports wagering activities.

FanDuel was started in 2009, and DraftKings in 2012. Though federal law permits fantasy sports, a few say it should be regulated.

Edelman said the risk for the sites and their investors – Major League Baseball is among those with a deal with DraftKings – is whether insider information could be used to win contests.

Grove, of legalsportsreport.com, said this may be a watershed moment for a sector that has resisted regulation but now may need it to prove its legitimacy.

Signing up for a DraftKings account involves choosing a username, providing an email address, clicking a box that says the person is older than 18 or 19, depending on the state, and providing credit card information. “One thing I find grossly troubling about DraftKings is they spend so much time and money advertising and a lot less time in internal controls and operating in a risk averse manner”. “Any audit process? The inability of the industry to produce and clear and compelling answer to these questions to anyone’s satisfaction is why it needs to be regulated”.