Call For Regulation Of DFS (Daily Fantasy Sports) Grows Amid Shady Insider Trading Possibility At DraftKings

[PatsFan1283]

I was gonna say I wonder if FD would tell Ethan they aren't paying him because of all the controversy.

No way would that holdup in court. Site policy allows employees of other sites to play and also the big win was from last week. He probably had a check written immediately. I would think he possesses the actual money right now.

 

[HacheMan]

Scandal Erupts in Unregulated World of Fantasy Sports

NYTimes
By JOE DRAPE and JACQUELINE WILLIAMS


OCTOBER 5, 2015



A major scandal is erupting in the multibillion-dollar industry of fantasy sports, the online and unregulated business in which players assemble their fantasy teams with real athletes. On Monday, the two major fantasy companies were forced to release statements defending their businesses’ integrity after what amounted to allegations of insider trading, that employees were placing bets using information not available to the public.

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 employee — a midlevel content manager — won $350,000 at rival site FanDuel that same week.

The incident has raised questions about who at daily fantasy companies has access to valuable data, how it is protected and whether the industry can — or wants — to police itself.
The leagues have been swelling in popularity, their advertisements blanketing football game broadcasts.

The industry has its roots in informal fantasy games that began years ago with groups of fans playing against each other for fun over the course of a season. They assembled hypothetical teams and scored points based on how players did in actual games.


But in recent years, companies, led by DraftKings and FanDuel, have set up online daily and weekly games in which fans pay an entry fee to a website — anywhere from 25 cents to $1,000 — to play dozens if not hundreds of opponents, with prize pools that can pay $2 million to the winner. Critics have complained that the setup is hardly different from Las Vegas-style gambling that is normally banned in the sports world.

On Monday, DraftKings and FanDuel released a joint statement that said that “nothing is more important” than the “integrity of the games we offer,” but offered few specifics about how they keep their contests on the level.

A spokesman for DraftKings acknowledged that employees of both companies have won big jackpots playing at other daily fantasy sites. Late Monday, the two companies temporarily banned their employees from playing games or in tournaments at any other site; they already had prohibited their employees from playing on their own company sites.

“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.”
Industry analysts said the episode could leave the leagues open to further criticism that they are too loosely regulated.
“The single greatest threat to the daily fantasy sports industry is the misuse of insider information,” said Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff in Fort Lauderdale, Fla. “It could imperil this nascent industry unless real, immediate and meaningful safeguards are put in place. If the industry is unwilling to undertake these reforms voluntarily, it will be imposed on them involuntarily as part of a regulatory framework.”

Already, there has been intensifying discussion on social media and among lawmakers over whether daily fantasy games are pushing the boundaries of an exemption in a 2006 federal law that has allowed them to operate. The law prohibited games like online poker but permitted fantasy play, deemed games of skill not chance, under lobbying from professional sports leagues. The games are legal in all but five states.

But because Congress did not foresee how fantasy sports would explode, one member, Representative Frank Pallone Jr., Democrat of New Jersey, recently requested a hearing to explore the relationship between fantasy sports and gambling. “I really think if they had to justify themselves at a hearing they wouldn’t be able to,” Mr. Pallone said in a recent interview.

The data that DraftKings acknowledged was released by its employee, Ethan Haskell, showed what particular players were most used in all lineups submitted to the site’s Millionaire Maker contests. Usually, that data is not released until the lineups for all games are finalized. Getting it early, however, is of great advantage to make tactical decisions, especially when your opponents do not have the information at all.

A spokeswoman for DraftKings said Haskell simply made a mistake and that the company was certain that he did not use the information improperly. She declined to go into specifics about the safeguards or the company’s auditing policies.
Representatives of both companies acknowledged that many employees of daily fantasy companies were players first and had continued to compete on other sites. Ben Brown, a co-founder of Daily Fantasy Sports Report, was first to disclose that Haskell had posted the information.

“There’s a significant amount of crossover,” said Chris Grove, an industry analyst and editor of legalsportsreport.com. “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.”
Many of these employees set the prices of players and the algorithms for scoring. In short, they make the market.
As daily fantasy sports has blossomed into a multibillion-dollar industry in the past year, DraftKings and FanDuel have become a cherished sponsor of M.L.B. and N.F.L. franchises.


Eilers Research, which studies the industry, estimates that daily games will generate around $2.6 billion in entry fees this year and grow 41 percent annually, reaching $14.4 billion in 2020. So high are the potential financial rewards that DraftKings and FanDuel have found eager partners in N.F.L. teams, even as league executives remain staunch opponents of sports betting.
Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots have stakes in DraftKings and the company recently struck a three-year deal with the N.F.L. to become a partner of the league’s International Series in Great Britain, where sports betting is legal. In addition, DraftKings has tapped hundreds of millions from Fox Sports, and FanDuel has raised hundreds of millions of dollars from investors like Comcast, NBC and KKR.

Adam Krejcik, a managing director at Eilers Research, said early missteps are often part of booming growth in a new and often misunderstood sector like daily fantasy sports. He said whether Haskell, the DraftKings employee, made an innocent mistake or not the damage is done.

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

“You have information that is valuable and should be tightly restricted,” Grove said. “There are people outside of the company that place value on that information. Is there any internal controls? Any audit process? The inability of the industry to produce a clear and compelling answer to these questions to anyone’s satisfaction is why it needs to be regulated.”

 

[HacheMan]

(Article is in response to NYTimes article in above post)



5 THINGS THE NEW YORK TIMES GOT WRONG IN TODAY’S EDITORIAL ON FANTASY SPORTS & GAMBLING


American Gaming Association
PRESS RELEASE | 10.05.2015


Washington, DC - The New York Times missed the mark in five important areas of today’s editorial (“Rein in Online Fantasy Sports Gambling”), which seemingly calls on the federal government to ban popular fantasy sports activities.

#1: New York Times fails to mention the proven benefits of regulation.

Prohibition on sports betting is a massive failure. Americans are finding limitless ways to spend billions of dollars illegally to gamble on professional and amateur sporting events. In the unregulated market, integrity cannot be guaranteed and dollars often fund criminal enterprises. Yet this seems to be exactly what the New York Times – which makes not a single mention of regulation – is promoting. More big-government dictates on what games Americans can and cannot consume is destined to fail.

#2: “This boom has grown because the UIGEA of 2006, which prevented payment processors from working with gambling websites, included an exemption for fantasy sports.”

Actually, the boom is directly tied to tremendous public demand and antiquated, ineffective laws like the Professional and Amateur Sports Protection Act (PASPA) of 1992 that prohibits sports wagering largely outside of Nevada.

Sports fans will wager $95 billion on NFL and college football games this season, according to an AGA estimate released last month. The vast majority – $93 billion – of wagers will be placed illegally. Just under $2 billion will be wagered at sports books in Nevada. On last season’s Super Bowl alone, Americans made $3.8 billion worth of illicit bets – an amount 38 times greater than the total bet legally.
Americans are clamoring to engage with their favorite sporting activities in an interactive way, and daily fantasy sports creators have tapped into that demand.

#3: “Because daily and weekly fantasy games are so new, there are very few studies on whether they are addictive and result in the social problems typically associated with gambling.”

Across 40 states, casino gaming contributes $240 billion annually to America’s economy, supports 1.7 million jobs and generates $38 billion in tax revenues in support of education and other important areas, according to Oxford Economics.
Adam Sacks, who conducted the Oxford study, described gaming as “a vast industry that boosts local communities across the country by supporting jobs and generating customers for businesses.”

Further, even as the industry has expanded to operate in 40 states, problem gambling rates have stayed steady. According to a decade-long study conducted by the University of Buffalo, “despite an increase in gambling opportunities, rates of problem gambling remained stable.”
#4: “The allure of profits from gambling clouds otherwise rational minds.”

Policymakers and voters who decide to bring casino gaming to their state understand the many benefits the industry provides. In Las Vegas and in communities beyond Nevada, casinos serve as a potent catalyst to attract new businesses and bolster existing ones. Residents, elected officials, police chiefs, small businesses, non-profit executives and others typically associate casinos with good jobs, strong partnerships, much-needed tax revenue, millions of dollars in charitable giving and a fun entertainment experience. Just ask folks in Council Bluffs, Iowa; Columbus, Ohio; or Pittsburgh, Pennsylvania.

Moreover, typical casino visitors defy stereotypes. Most are between the ages of 21 and 59, and a plurality earns $60,000 to $99,000 a year. They’re also well-educated, churchgoing voters who contribute to their communities. And when they visit a casino, most set a budget of less than $200.

#5: “Giving people more ways to bet on the outcomes of sports is sure to threaten the integrity of sports and create more gambling addicts, especially among young people who are already more likely to engage in risky behaviors.”

Illegal sports betting – which is running rampant across the country and has grown exponentially since a federal law banned it in nearly every state in 1992 – poses a significant threat to the integrity of sporting events. In contrast, in Nevada, where sports betting is regulated, sports books at casinos have notified the FBI of unusual betting activity on sporting events that have led to convictions on match fixing. Increasingly, progressive sports leagues are turning to regulation as the best means of protecting the integrity of sports.

About AGA: The American Gaming Association is the premier national trade group representing the $240 billion U.S casino industry, which supports 1.7 million jobs in 40 states. AGA members include commercial and tribal casino operators, suppliers and other entities affiliated with the gaming industry. It is the mission of the AGA to be the single most effective champion of the industry, relentlessly protecting against harmful and often misinformed public policies, and paving a path for growth, innovation and reinvestment.

 

[RenoChazz]

Regulation is almost never a good idea. If you allow the gov't to F something up, then they probably will.

But there does need to be some type of oversight and transparency.

One thing is for sure in the USA...if an industry doesn't police itself, then you better be sure the Gov't will.

They did it to themselves. I could've told them this dilemma would arise eventually. Although I didn't see it unfolding this way. Only reason it got brought to the forefront is because Ethan was dumb enough to post ownership %s before games started. F'n idiot.

+1 I just finally signed up for draft kings to try some regression stuff. If the gov regulates they might fuck up the product.

 

[HacheMan]

[h=1]Why The Industry’s Reaction To The DraftKings Leak Is A Clarion Call For Immediate Regulation Of Daily Fantasy Sports[/h]
legalsportsreport.com
October 5, 2015


The nature of daily fantasy sports likely means that the industry fundamentally requires some form of external oversight to function sustainably.
That’s the conclusion I kept returning to as I talked to players, industry stakeholders, and the media this weekend about the recent data leak at DraftKings.
But after seeing the official reactions from DraftKings and FanDuel this morning, I realized that the industry doesn’t just require oversight as an academic matter. Rather, it is in desperate and immediate need of said oversight.
Why?
[h=2]Operators aren’t providing any answers[/h]Nowhere in the statements from FanDuel or DraftKings do we find a single concrete detailregarding:

• Company policy regarding employee access to data. How many employees have access? How often is it queried? How long does the company keep the logs of such queries?
• The breach that led to this conversation. While DraftKings co-founder Matt Kalish appears to have provided some secondhand details to RotoGrinders about Ethan Haskell’s inadvertent release of DK lineup data, neither statement offers any insight or clarity into what data Haskell had access to, when he had the data, to or how he was able to circumvent the internal policies referenced by the statements.
• The landscape leading up to this event. How many investigations has each site undertaken in the past year regarding the potential for fraud? What was the resolution of those investigations? How have the investigatory approach and the resources dedicated to said investigations evolved as the industry has grown into one where billions are wagered annually in the space of two years?

The data leak occurred over a week ago. So it’s not as if the companies need time to formulate a complete response. They’ve had that time.
In a regulated environment, the answers to all of the above questions would be available.
Would all the information be made available publicly, all the time? Not necessarily. But regulators would have the access, the resources, and the mandate to produce comprehensive, objective answers in situations where such answers were needed.
[h=2]Self-policing is undermining operator credibility[/h]Prior to the statements, the general attitude expressed on social media and discussion forums was that DFS operators are generally in a poor position to police themselves, for myriad reasons.
Anecdotally, that attitude has only hardened following the statements.
A self-regulatory environment is only tenable within the context of high transparency or high trust. Today’s statements appear to engender neither, strengthening the argument for immediate regulatory intervention.
[h=2]What about the operators that didn’t issue statements?[/h]DraftKings and FanDuel are the largest DFS operators by a significant margin. But that doesn’t mean that they are the only operators of significant size or volume.
There are dozens of other DFS operators, including platforms backed by Amaya, CBS, andYahoo.
What is their policy on data protection? On employees playing at other sites? On fraud prevention?
We don’t know. And the reason we don’t know is because there’s no central force articulating and enforcing minimum standards, no one entity that can credibly describe the state of the industry on these key issues.
Instead what we get is a delayed, ad hoc response from the industry to an existential threat. Worryingly, such a response strongly suggests that the industry also takes an ad hoc approach to self-policing.
That is simply an unacceptable status quo when millions of players will risk billions of dollars this year on games they’ve been told – but can’t be shown – are fair.

 

[ML Dog]

All of their funding is registered with the SEC and we know who the owners of both sites are.

The situation is how it looks. Nothing less, nothing more.

Random tidbit: I actually met this Ethan kid a few yrs back. Seemed like a nice guy, I don't really think he was trying to do anything shady. I blame the sites for not realizing the industry isn't in it's infancy anymore and not seeing a problem like this coming. FD employees shouldn't be allowed to play on DK and vice versa.

Ethan is said to have submitted a Lineup at FanDuel that appears to have been constructed using the info available to him on ownership and this lineup cashed for $350K and you don't feel that he did anything shady?

Really?

 

[RenoChazz]

Ethan is said to have submitted a Lineup at FanDuel that appears to have been constructed using the info available to him on ownership and this lineup cashed for $350K and you don't feel that he did anything shady?

Really?

+1 he def knew it was shady, he just knew it wasn't illegal or even against company policy, and could make a lot of money. Makes you wonder if the owners are as smart as people think they are.

 

[PatsFan1283]

Ethan is said to have submitted a Lineup at FanDuel that appears to have been constructed using the info available to him on ownership and this lineup cashed for $350K and you don't feel that he did anything shady?

Really?

The info isn't as valuable as you think.

Even if he used the ownership info, why is it his fault the site lets him play? If the sites think it gives him an advantage then don't let him play. How is it his fault? It is within the rules for DK employees to play on FD as it currently stands.

 

[ML Dog]

+1 he def knew it was shady, he just knew it wasn't illegal or even against company policy, and could make a lot of money. Makes you wonder if the owners are as smart as people think they are.

Would seem to be quite short sighted on his part...to be very very kind. Others would use much more harsh terms to describe this move on his part. Why is he not just having his line-ups submitted by acquaintances suitably "distanced" from himself like all the other guys within DF and FD who have access to (and are using) this info are? To get their lineups set? Without this being able to be traced to themselves?

 

[PatsFan1283]

Would seem to be quite short sighted on his part...to be very very kind. Others would use much more harsh terms to describe this move on his part. Why is he not just having his line-ups submitted by acquaintances suitably "distanced" from himself like all the other guys within DF and FD who have access to (and are using) this info are? To get their lineups set? Without this being able to be traced to themselves?

Nobody had any problem with him playing at all. That wasn't the issue.

He blew his "cover" so to speak by publishing an article on ownership %s before they were public. That is why he got caught. That was his error. His error wasnt that he played.

 

[ML Dog]

Nobody had any problem with him playing at all. That wasn't the issue.

He blew his "cover" so to speak by publishing an article on ownership %s before they were public. That is why he got caught. That was his error. His error wasnt that he played.

Oh. I'd have expected there were rules against those with access to such info playing at other sites. Not that this would prevent them from doing so of course but simple common sense informs me that this would be within their work contract...as this is exactly the type of situation that one pays Lawyers $500/hr. to forsee and keep a Company from falling prey to.

 

[vitterd]

Money, gambling, Internet.....problems.

Same as Internet poker being rigged( which many here at RX "in the know" told me I was wrong about years ago)

i fear this may blow up into a huge scandal

 

[ChiefMuzz]

Thanks Hache man for the report and information. I totally agree with your take on this as well.

 

[FelixUnder]

Money, gambling, Internet.....problems.

Same as Internet poker being rigged( which many here at RX "in the know" told me I was wrong about years ago)

i fear this may blow up into a huge scandal

Agree. I wouldn't be surprised at all if this is the tip of the iceberg.

 

[UseLogic]

Both FD and DK tournaments seem to be rigged to me. I played baseball tournaments and i was actually in first place a few times but with a few innings left, out of nowhere, fake accounts with 1 or 2 wins with players you would never pick come from behind and win the top prizes. Instead of winning a few thousand, I end up winning $1.20 or something. Unless you get a download of everybody's lineup after the games start, which is not hard to do, the games can be rigged.

 

[ML Dog]

Both FD and DK tournaments seem to be rigged to me. I played baseball tournaments and i was actually in first place a few times but with a few innings left, out of nowhere, fake accounts with 1 or 2 wins with players you would never pick come from behind and win the top prizes. Instead of winning a few thousand, I end up winning $1.20 or something. Unless you get a download of everybody's lineup after the games start, which is not hard to do, the games can be rigged.

I'm in a State thats not allowed to play. I've been mad about this fairly frequently but also not...cuz of what you say. Its what I assumed to be the case. I mean, put yourself in their place, you have an advertised promise to pay out Millions and you also have an executable way via Computer Technology to avoid paying out the entire amount...

The conclusion that most would reach is that you've been "gifted" through your hard work and special genius a unique opportunity within history to make a whole lot of money and very possibly get away with it. On top of that you're wisdom is so great that you've maneuvered the Greasing of The Right Wheels, the VC investors you attracted came with such great "contacts" and now you're here with an investors list that includes names that are gonna make damn sure that the rest of that Iceberg that Felix Under alludes to a couple posts back remains unseen.

The Conclusion you arrive at is that you're almost God-Like, modern-day untouchable, like, On-High at the top of a mountain looking down on the teeming mass of peasants. The Hell with them, people get what they deserve what they work for and you worked hella hard for this, all you're doing is using Technology to its maximum benefit for yourself. Its where you arrive at..."who could really find fault with that? Its what they'd do if they could but they can't because they aren't as smart as me."

I wouldn't expect much more to come from this....or much more re: "further revelations" of unethical stuff cuz as far as DFS has made it suggests some real powerful people are backing it cuz they're making money from it and all whose being taken advantage of is scumbag gamblers. Lesser People than themselves. The way they see it, at least.....The Unwashed Masses. And these people, these politicians and bankers....this is their Life's Blood...taking advantage of whoever they can.

Expecting to see any real concern for Gamblers getting taken is about the same as expecting sympathy for Smokers.

Might be some later Class Action lawsuits if stuff can get proven but I doubt that comes to pass. I cannot even anywhere near to fathom they will be this reckless to let incriminating info get out.

 

[PigskinArmor]

How close is the score of the winning player of the 1 million each week to yahoo or espn free fantasy tracking leaders?

 

[TheFunkMonkey]

Both FD and DK tournaments seem to be rigged to me. I played baseball tournaments and i was actually in first place a few times but with a few innings left, out of nowhere, fake accounts with 1 or 2 wins with players you would never pick come from behind and win the top prizes. Instead of winning a few thousand, I end up winning $1.20 or something. Unless you get a download of everybody's lineup after the games start, which is not hard to do, the games can be rigged.

I'm convinced.

Just this Sunday --- at 4:33pm, I was #11 in the DK Millionaire Maker. Think I finished #780?

Obviously, rigged.

 

[HacheMan]

DraftKings employee's big win raises doubts about transparency, integrity

ESPN.com news services

An early release of lineup information in a DraftKings contest is raising questions about the transparency of the burgeoning daily fantasy industry.
Users in online forums are asking whether a DraftKings employee might have used information about lineups to win $350,000 in a competing contest on the FanDuel site. The information detailed the percentages of entrants who selected certain fantasy players.
The release, which the employee said was inadvertent, comes at a time when the daily fantasy industry is booming and DraftKings and FanDuel are spending tens of millions of dollars on advertising, which touts the ability of contest winners to get rich playing daily fantasy sports.

It also comes at a time when there are still gray areas surrounding the legality of the contests and no independent oversight over how the contests are run and whether everyone who enters is on a level playing field.


There are no allegations -- or evidence -- that the DraftKings employee used information about the percentage of players who drafted certain players in last week's contest to finish in second place in the NFL Sunday Million contest run by FanDuel. The contest, which cost $25 to enter, featured $5 million in cash winnings, including $1 million to the winner.

A DraftKings spokesman acknowledged that employees of both companies have earned sizable prizes playing at other daily fantasy sites. On Tuesday, FanDuel issued a statement saying employees from both DraftKings and its site have temporarily been banned from "participating in online fantasy sports contests for money."

"We are temporarily restricting employees from participating in DFS contests as an interim measure while we work with the fantasy industry to develop and implement a more formal policy," the statement said.
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. If those players perform well, the odds of the person holding them winning go up dramatically.

DraftKings and FanDuel posted on their sites an unusual joint statement saying they have no evidence anyone misused information for profit. The statement said nothing is more important than the integrity of the games they offer to customers and that employees with access to data are "rigorously monitored by internal fraud control teams."

DraftKings did not respond to questions about what policies and controls it has in place, but a spokeswoman for FanDuel said her company does not believe there was any attempt to manipulate its contest.

"We operate based on the trust of our players," Justine Sacco said. "This is not a new issue for us as a company or an industry, and maintaining the integrity of our contests and games is paramount to sustaining and growing our business."
Questions about the release of the percentages of drafted players were first raised in a posting on the Rotogrinders site and reported more in depth by DFS Report and the Legal Sports Report websites.

Chris Grove, who operates the Legal Sports Report site, said even the outside possibility of a rigged contest raises critical questions about the integrity of the daily fantasy industry.

"There are questions the industry cannot provide a satisfactory answer to," Grove said. "They can't tell you who has access to what data and what controls they have in place to ensure data isn't abused. Even if they did tell you, consumers wouldn't find the answers totally satisfactory. That's a recipe for regulatory intervention."

Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff in Fort Lauderdale, Florida, echoed Grove's comments but went further by speculating that regulation will be introduced if the industry fails to address its urgent primary weaknesses.
"The single greatest threat to the daily fantasy sports industry is the misuse of insider information," Wallach told the New York Times. "It could imperil this nascent industry unless real, immediate and meaningful safeguards are put in place. If the industry is unwilling to undertake these reforms voluntarily, it will be imposed on them involuntarily as part of a regulatory framework."
The broader issue is whether players who put up entry fees to try to win money in the contests can be sure that insiders -- or anyone else -- are not getting an unfair advantage. There is no regulation of online daily fantasy, which has exploded the past two years into an industry where billions of dollars are at stake.

Joe Asher, who heads U.S. operations for the William Hill sports betting chain, said daily fantasy is gambling and should be regulated by the government, just as sportsbooks are regulated in Nevada to ensure everything is on the up-and-up.
"I'm all for daily fantasy betting," Asher said. "I think it should be legal, I think it should be regulated and I think it should be taxed. But nobody is in favor of unregulated Internet gambling, and that is exactly what daily fantasy sports is."
<article class="ad-300" style="box-sizing: border-box; clear: both; overflow: hidden; position: relative; z-index: 1000026; margin: 0px 0px 0px 10px; float: right; color: rgb(0, 0, 0); font-family: Georgia, 'Times New Roman', Times, serif; font-size: 16px;">
</article>Marc Edelman, a law professor and sports business scholar at Baruch College, City University of New York, 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.

"There's a big difference between fixing a game in sports betting and trading on insider information in daily fantasy," Edelman said. "It might be difficult to convince a team or a member of a team to lose on purpose. It's a lot easier to have material information about a player's mentality or physical condition no one else does and pass that along."

 

[HacheMan]

Answering seven biggest questions on the DraftKings data leak

• David Purdum
• Darren Rovell
  
  The integrity of the daily fantasy sports industry is under heavy scrutiny due to employee access to advantageous data that is unavailable to the public. While industry sources suggest the initial incident is being overblown, critics -- and some players -- say it has exposed dangerous flaws in the unregulated billion-dollar industry. Here are seven questions -- along with answers -- that many fantasy players as well as casual observers are asking right now.
• 
  What happened?
  On Sunday, Sept. 27, after the early NFL games had kicked off but before the late afternoon slate had begun, an employee for daily fantasy sports operator DraftKings published data revealing what players were included on the most rosters. The same weekend, the employee, written content manager Ethan Haskell, finished second in a million-dollar fantasy contest on competing daily fantasy site FanDuel. He won $350,000.
  According to a statement from DraftKings, Haskell did not receive the data until 1:40 p.m., 40 minutes after rosters locked on FanDuel.
  The daily fantasy sports industry is unregulated, and thus no independent investigation is available.
  A week later, the controversy has escalated into an international story, and industry insiders believe it is a prime example for why daily fantasy needs outside regulation.
• Why does the ownership data matter?
  
  Including players who are owned by only of a small percentage of entries is a prominent strategy in daily fantasy, especially in large contests with hundreds of thousands of entries. Winning entries in these huge guaranteed prize pool tournaments, where millions of dollars are at stake, often feature a player or players who are owned by a small percentage of entries, but go on to have better-than-expected performances. For example, a team with New England Patriotsrunning back LeGarrette Blount (owned by just 2.2 percent of entries) won a million-dollar tournament on DraftKings tournament in Week 3.
  There is debate over how big of an edge knowing the ownership percentage of players produces, but the majority believes it is indeed an edge, and one that is magnified by high-level players, who often enter hundreds of lineups.
  "It would be an advantage," David Kaplen, a high-level daily fantasy player, said of knowing accurate ownership data before rosters lock. "What we're dealing with is information. The better information you have, the more it's going to help you in the long run. It wouldn't guarantee you anything, but over the course of time, it would help you in the long run. There's no doubt."
  Ownership data, under normal circumstances, is not revealed to the public until after games start. FanDuel publishes ownership data after the Thursday night game kicks off, and rosters for the week are locked and cannot be changed at that time. However, many DFS players do use the FanDuel ownership to form and estimate of ownership percentages for other sites, including DraftKings, which does allow rosters to be adjusted after Thursday's game and up until the early Sunday kickoffs.
  One additional concern that multiple DFS players told ESPN Chalk about employee access to data is the ability to look at high-level players' lineups, copy them and enter them on another site. Some are saying that's more of a concern than the ownership percentages.
  On Tuesday, FanDuel spokesperson Justine Sacco told ESPN Chalk that only 0.3 percent of total money won on its site has been won by DraftKings employees, which would be less than $10 million.
• 
  Who has access to the data?
  According to DraftKings, "a very limited number of people" have access to ownership data. "It is confined only to those that require this info to perform their duties," DraftKings spokesperson Sabrina Macias told ESPN Chalk in an email.
• 
  Why is the data not readily available to the public?
  DraftKings currently believes keeping ownership data hidden until rosters are locked creates a better overall experience for players.
  "We have considered whether it would be a cool feature to have people be able to see trends and other overall player utilization info in real time as selections are being made," Macias said. "But the reason we haven't done that is because we don't want to create an incentive to wait until the last minute to submit your roster. We also don't want to create an incentive for people to submit dummy lineups to manipulate the data being presented to the public. So [it is] better to wait to provide info like this until after lineups are locked."
  There will be further discussion about whether player experience is more important than providing a level playing field.
• 
  What are DraftKings, FanDuel and the Fantasy Sports Trade Association doing about it?
  With attacks on their integrity, FanDuel and DraftKings have banned employees from playing fantasy games for money. DraftKings said the ban is temporary and only for full-time employees.
  The Fantasy Sports Trade Association released the following statement: "The Fantasy Sports Trade Association (FSTA), DraftKings and FanDuel have always understood that nothing is more important than the integrity of the games we offer to fans. For that reason, the FSTA has included in its charter that member companies must restrict employee access to and use of competitive data for play on other sites. At this time, there is no evidence that any employee or company has violated these rules. That said, the inadvertent release of non-public data by a fantasy operator employee has sparked a conversation among fantasy sports players about the extent to which industry employees should be able participate in fantasy sports contests on competitor sites. We've heard from users that they would appreciate more clarity about the rules for this issue. In the interim, 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."
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  Why did this story escalate to an international level?
  Daily fantasy sports saturated the advertising market at the start of football season. DraftKings spent more than $24 million the first week of the NFL season, more than any other company in the U.S. in that time span. (ESPN accepts advertising from DraftKings and FanDuel). The abundance of ads combined with the sites' insistence that daily fantasy sports is not a form of gambling has not been well-received by the public and has drawn the attention of both federal and state lawmakers.
  The Unlawful Internet Gambling Enforcement Act of 2006 includes language precluding fantasy sports that meet certain criteria from being a "bet or wager." This is now the statute daily fantasy operators point to in terms of their legality.
  Arizona, Iowa, Louisiana, Montana and Washington state currently do not allow daily fantasy sports. Several additional states prohibit some form of daily fantasy.
  U.S. Congressman Frank Pallone has called for a hearing to assess the daily fantasy industry and its relationship to the professional sports leagues. The hearing has not been granted as of early October, but officials from the House Energy and Commerce Committee were aware of the controversy and planned to discuss its impact.
  Officials in Massachusetts, New Jersey, Nevada, Michigan and California are among those reviewing the legality of daily fantasy sports.
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  </article>How are the sports leagues involved and what are they saying?
  Major League Baseball and the National Hockey League own equity in the DraftKings. The NBA owns equity in FanDuel.
  Major League Baseball, which prohibits employees from participating in money fantasy games, said Tuesday in a statement that it was surprised DraftKings allowed its employees to participate in fantasy games and said it has reached out to DraftKings.
  The NBA was working on a response.
  The NFL doesn't have a league sponsorship deal, nor can teams have a sponsorship deal with DFS operators. But teams are allowed to have advertising relationship and stadium signage. And most teams do.
  The NFL also prohibits teams from owning daily fantasy sites, but allows the companies of the owners themselves to invest. Dallas Cowboys owner Jerry Jones and Patriots owner Robert Kraft are investors in DraftKings. Kraft, through a team spokesperson, declined to comment on the controversy.