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There’s A Wild Inside Information Scandal Involving FanDuel And DraftKings

DraftKings employees are allowed to bet on rival daily fantasy sites, according to Forbes.

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The Times quotes industry analyst Eilers Research, which estimates that daily fantasy sports companies will bring in $US2.6 billion in entry fees in 2015 and climb to over $US14 billion in 2020. Although DraftKings and FanDuel prohibit their employees from participating in contests at their own sites, they were allowed to compete at other DFS sites before the two companies temporarily banned that practice on Monday.

Last week, a DraftKings employee admitted to inadvertently releasing data before the start of the third week of N.F.L. games, a move akin to insider trading in the stock market.

The leak looks particularly suspicious, considering that the DraftKings employee who made the information available won $350,000 at FanDuel during that particular week.

DraftKings told the Times it was certain Haskell had not used the Millionare Maker info incorrectly, and people have been told that he received the info after rosters were locked on FanDuel.

An individual who has access to data on which players have been selected by other contestants, while not sure to win by any stretch, could use that to select less favored players, which if they had a high scoring game, could give the fantasy owner a significant advantage. He said the casino industry sees fantasy sports as a potential partner “to grow both of our businesses”. “Employees with access to this data are vigorously monitored by internal fraud controls teams, and we have no evidence anyone misused it”.

“It is tantamount to insider trading which would kill the industry”, said Daniel Wallach, a sports betting law expert based in Florida. Sports and entertainment lawyer Jaia Thomas explained to HuffPost Live on Monday that courts claim the use of statistics and knowledge of players’ strengths and weaknesses constitutes a “skill” that sets fantasy leagues apart from other types of gambling.

Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites, shouldn’t be treated any differently than traditional sports betting and, as a result, should be regulated.

DraftKings and FanDuel posted on their sites an unusual joint statement saying they have no evidence anyone misused information for profit.

“One really has to ask questions over at DraftKings what regulations they have in place and why an employee has access to so much information”, said Marc Edelman, a law professor and sports business scholar at Baruch College, City University of New York.

The fantasy provider has partnerships with almost every major sports league in North America and is known for its ubiquitous advertising campaign that has come to dominate sports broadcasts over the past year.

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.

Employees of DraftKings work at the company’s offices in Boston.

Certainly does not look good from an optics standpoint and it strengthen the case for additional oversight and regulation, he said.

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As detailed by Legal Sports Report, the integrity of the game comes down to one concerning mishap. There are people outside of the company that place value on that information. He said the statements offered more questions than answers.

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