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."
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</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."
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."
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."
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.
ESPN ends DraftKings-sponsored segments
ESPN said Tuesday that it's pulling on-air segments sponsored by one of the companies implicated in a possible scandal that's rocked the billion dollar world of fantasy sports.
During an afternoon appearance on "Outside the Lines," ESPN anchor Bob Ley detailed how the company is adjusting its partnership with DraftKings.
"ESPN today continued running commercials for the two main daily sports fantasy companies, but has removed sponsored elements from within shows," Ley said.
A spokesperson for ESPN confirmed to CNNMoney that the channel has pulled DraftKings billboards and sponsorship out of news programming on Tuesday, adding that it is "standard procedure for us to pull these kind of sponsorships and integrations when we are covering significant news, to avoid any suggestion of influence on our coverage."
The spokesperson said that ESPN is evaluating the integration of DraftKings in its programming on a day-to-day basis.
And contrary to Ley's on-air statement that the commercials are still running on ESPN, the spokesperson said that DraftKings pulled its ads on the channel on Tuesday.
The decision comes a day after the New York Times reported that a DraftKings employee admitted to inadvertently releasing data prior to the slate of Week 3 NFL games, prompting claims that the employee may have used insider information to win a $350,000 prize at FanDuel.
Related: Fantasy sports giants ban employees from games over cheating concerns
That admission forced DraftKings and FanDuel, two of the biggest companies in fantasy sports, to defend their business practices. The two companies said that they have banned employees from playing fantasy games for money.
There's been no avoiding DraftKings ads on ESPN. The two sides completed a deal over the summer making DraftKings the official daily fantasy company of ESPN.
As a result of that deal, DraftKings was integrated across ESPN's programming. Matthew Berry, ESPN's senior fantasy analyst, even serves as a paid spokesman for DraftKings.
Last month, well before the insider trading scandal erupted, Berry was forced to defend this arrangement after he was inundated with criticism from readers.
Berry said that his integration of DraftKings changed little about what he had written and, above all else, he is a fan of the company he's paid to promote.
"I really enjoy playing daily fantasy and I really enjoy doing it on DraftKings," Berry wrote. "I'd recommend them anyway, so if they want to send me a check to do it? You bet. Where do I sign?"
ESPN said Tuesday that it's pulling on-air segments sponsored by one of the companies implicated in a possible scandal that's rocked the billion dollar world of fantasy sports.
During an afternoon appearance on "Outside the Lines," ESPN anchor Bob Ley detailed how the company is adjusting its partnership with DraftKings.
"ESPN today continued running commercials for the two main daily sports fantasy companies, but has removed sponsored elements from within shows," Ley said.
A spokesperson for ESPN confirmed to CNNMoney that the channel has pulled DraftKings billboards and sponsorship out of news programming on Tuesday, adding that it is "standard procedure for us to pull these kind of sponsorships and integrations when we are covering significant news, to avoid any suggestion of influence on our coverage."
The spokesperson said that ESPN is evaluating the integration of DraftKings in its programming on a day-to-day basis.
And contrary to Ley's on-air statement that the commercials are still running on ESPN, the spokesperson said that DraftKings pulled its ads on the channel on Tuesday.
The decision comes a day after the New York Times reported that a DraftKings employee admitted to inadvertently releasing data prior to the slate of Week 3 NFL games, prompting claims that the employee may have used insider information to win a $350,000 prize at FanDuel.
Related: Fantasy sports giants ban employees from games over cheating concerns
That admission forced DraftKings and FanDuel, two of the biggest companies in fantasy sports, to defend their business practices. The two companies said that they have banned employees from playing fantasy games for money.
There's been no avoiding DraftKings ads on ESPN. The two sides completed a deal over the summer making DraftKings the official daily fantasy company of ESPN.
As a result of that deal, DraftKings was integrated across ESPN's programming. Matthew Berry, ESPN's senior fantasy analyst, even serves as a paid spokesman for DraftKings.
Last month, well before the insider trading scandal erupted, Berry was forced to defend this arrangement after he was inundated with criticism from readers.
Berry said that his integration of DraftKings changed little about what he had written and, above all else, he is a fan of the company he's paid to promote.
"I really enjoy playing daily fantasy and I really enjoy doing it on DraftKings," Berry wrote. "I'd recommend them anyway, so if they want to send me a check to do it? You bet. Where do I sign?"
DraftKings has announced that they "found no wrongdoing" in this matter. Good Lord. Who is legal representation for this company? Jackie Chiles?
One thing is certain DK needs to fire their "Legal Team" cuz to allow them to issue this statement is ridiculous. Did any one of you here ask DraftKings to investigate anything? Because you expected that their "investigation" would, like, provide some insight into this?
After failing to create contracts with employees that would have prevented this mess DK's Legal Advisors do not dissuade them from making this comment? That their investigation has found on wrongdoing?
For a lawyer, Failing to anticipate this situation and mold legal language to prevent it from happening is tantamount to a what would be for a mechanic working on your car and failing to secure a Brake Line or noticing that there is a fire on the underbelly of your car as you drive away and deciding its probably nothing to be concerned with.
Similar degrees of Absolute Failure.
DK has idiots for Lawyers and this announcement that they've found no wrongdoing demonstrates that DK thinks that the rest of the world is as stupid as their lawyers are.
One thing is certain DK needs to fire their "Legal Team" cuz to allow them to issue this statement is ridiculous. Did any one of you here ask DraftKings to investigate anything? Because you expected that their "investigation" would, like, provide some insight into this?
After failing to create contracts with employees that would have prevented this mess DK's Legal Advisors do not dissuade them from making this comment? That their investigation has found on wrongdoing?
For a lawyer, Failing to anticipate this situation and mold legal language to prevent it from happening is tantamount to a what would be for a mechanic working on your car and failing to secure a Brake Line or noticing that there is a fire on the underbelly of your car as you drive away and deciding its probably nothing to be concerned with.
Similar degrees of Absolute Failure.
DK has idiots for Lawyers and this announcement that they've found no wrongdoing demonstrates that DK thinks that the rest of the world is as stupid as their lawyers are.
[h=1]New York Attorney General Opens Inquiry Into Fantasy Sports Sites[/h]Joe Drape and Jacqueline Williams
1 Hour AgoThe New York Times
Getty Images
The New York attorney general began an inquiry Tuesday into the prospect that employees of daily fantasy football sites have won lucrative payouts based on inside information not available to the public, asking two leading companies, DraftKings and FanDuel, for a range of internal data and details on how they prevent fraud.
Word of the inquiry came as the revelation that DraftKings and FanDuel allowed their employees – many with information not available to customers – to play at each other's sites for large amounts of money continued to rattle the sports world.
Some of the industry's primary sponsors raised questions or distanced themselves from lucrative advertising and sponsorship deals. On Monday, both companies told The New York Times that they had temporarily prohibited their employees from playing in money games.
Major League Baseball, which owns a stake in DraftKings and has a sponsorship deal with it, said in a statement that it had a policy that "prohibits its own players and employees from participating in fantasy baseball games where money or something of value is at stake, and did not know that the situation was different at DraftKings."
"We have reached out and discussed this matter with them," it said.
ESPN reduced its association with DraftKings as well. On the network's "Outside The Lines" show, the host, Bob Ley, announced that while the network will continue to air regular advertisements for the daily fantasy sites, it will no longer run individual segments sponsored by the sites.
The N.F.L., which recently struck a three-year deal with DraftKings to become a partner of the league's International Series in Britain, declined to comment.
The attorney general's move may shed light on the inner workings of the sites, which charge a fee and allow participants to build rosters of hypothetical teams and score points against hundreds of competitors based on the actual performance of players. The sites say payouts can reach $2 million.
In a letter to both companies, Attorney General Eric T. Schneiderman demanded the names, job titles and descriptions of any employees who aggregate and compile a wide range of data that perhaps could be used to gain a personal advantage — including ownership percentages and pricing algorithms. Mr. Schneiderman also demanded that the companies turn over details of any internal investigations into their employees, including the one at the center of the current scandal, Ethan Haskell of DraftKings.
It was Haskell who admitted last week to inadvertently releasing data before the lineups of all N.F.L. games were locked in for the third week of the season in late September. That same weekend, Mr. Haskell, a midlevel content manager, won $350,000 at FanDuel.
The two companies said they had investigated Mr. Haskell and cleared him of wrongdoing.
More from the New York Times:
A Primer on Daily Fantasy Football Sites
High-Pressure Demands Suit the Yankees' Tanaka
Scandal Erupts in Unregulated World of Fantasy Sports
"It's something we're taking a look at — fraud is fraud," Mr. Schneiderman said in a radio interview early Tuesday before the inquiry was announced. "And, consumers of any product, whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can't commit fraud."
Neither DraftKings nor FanDuel would specify how many of their employees competed and won money on other sites.
In Washington, Representative Hakeem Jeffries, Democrat of New York and a member of the House Judiciary Committee, called on the panel to examine "whether permitting a multibillion-dollar industry to police itself serves the best interests of the American people" while Senator Robert Menendez, Democrat of New Jersey, and Representative Frank Pallone Jr., Democrat of New Jersey, asked the Federal Trade Commission to implement safeguards to ensure a fair playing field for enthusiasts of the daily fantasy games.
Daily fantasy has its roots in informal fantasy games that began years ago with groups of fans playing against one another for fun over the course of a season. They assembled hypothetical teams and scored points based on how players did in actual games.
But companies such as DraftKings and FanDuel have set up online daily and weekly games based on a similar concept in which fans pay an entry fee to a website — 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.
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 professional sports teams and leagues and major media companies.
Read MoreFormer pro poker player makes a living on fantasy sports
Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots have stakes in DraftKings, which recently struck a three-year deal with the N.F.L. to become a partner of the league's International Series in Britain, where sports betting is legal. In addition, DraftKings has tapped hundreds of millions of dollars from Fox Sports, and FanDuel has raised similar amounts from investors like Comcast, NBC and KKR.
Between the tens of millions of dollars in television advertising blitzing the airways and the potential for abuse in an unregulated industry, lawmakers now seem willing to examine 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 and not chance, under lobbying from professional sports leagues. The games are allowed in all but five states.
http://www.cnbc.com/2015/10/06/draf...nvestigated-by-new-york-attorney-general.html
1 Hour AgoThe New York Times
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The New York attorney general began an inquiry Tuesday into the prospect that employees of daily fantasy football sites have won lucrative payouts based on inside information not available to the public, asking two leading companies, DraftKings and FanDuel, for a range of internal data and details on how they prevent fraud.
Word of the inquiry came as the revelation that DraftKings and FanDuel allowed their employees – many with information not available to customers – to play at each other's sites for large amounts of money continued to rattle the sports world.
Some of the industry's primary sponsors raised questions or distanced themselves from lucrative advertising and sponsorship deals. On Monday, both companies told The New York Times that they had temporarily prohibited their employees from playing in money games.
Major League Baseball, which owns a stake in DraftKings and has a sponsorship deal with it, said in a statement that it had a policy that "prohibits its own players and employees from participating in fantasy baseball games where money or something of value is at stake, and did not know that the situation was different at DraftKings."
"We have reached out and discussed this matter with them," it said.
ESPN reduced its association with DraftKings as well. On the network's "Outside The Lines" show, the host, Bob Ley, announced that while the network will continue to air regular advertisements for the daily fantasy sites, it will no longer run individual segments sponsored by the sites.
The N.F.L., which recently struck a three-year deal with DraftKings to become a partner of the league's International Series in Britain, declined to comment.
The attorney general's move may shed light on the inner workings of the sites, which charge a fee and allow participants to build rosters of hypothetical teams and score points against hundreds of competitors based on the actual performance of players. The sites say payouts can reach $2 million.
In a letter to both companies, Attorney General Eric T. Schneiderman demanded the names, job titles and descriptions of any employees who aggregate and compile a wide range of data that perhaps could be used to gain a personal advantage — including ownership percentages and pricing algorithms. Mr. Schneiderman also demanded that the companies turn over details of any internal investigations into their employees, including the one at the center of the current scandal, Ethan Haskell of DraftKings.
It was Haskell who admitted last week to inadvertently releasing data before the lineups of all N.F.L. games were locked in for the third week of the season in late September. That same weekend, Mr. Haskell, a midlevel content manager, won $350,000 at FanDuel.
The two companies said they had investigated Mr. Haskell and cleared him of wrongdoing.
More from the New York Times:
A Primer on Daily Fantasy Football Sites
High-Pressure Demands Suit the Yankees' Tanaka
Scandal Erupts in Unregulated World of Fantasy Sports
"It's something we're taking a look at — fraud is fraud," Mr. Schneiderman said in a radio interview early Tuesday before the inquiry was announced. "And, consumers of any product, whether you want to buy a car, participate in fantasy football, our laws are very strong in New York and other states that you can't commit fraud."
Neither DraftKings nor FanDuel would specify how many of their employees competed and won money on other sites.
In Washington, Representative Hakeem Jeffries, Democrat of New York and a member of the House Judiciary Committee, called on the panel to examine "whether permitting a multibillion-dollar industry to police itself serves the best interests of the American people" while Senator Robert Menendez, Democrat of New Jersey, and Representative Frank Pallone Jr., Democrat of New Jersey, asked the Federal Trade Commission to implement safeguards to ensure a fair playing field for enthusiasts of the daily fantasy games.
Daily fantasy has its roots in informal fantasy games that began years ago with groups of fans playing against one another for fun over the course of a season. They assembled hypothetical teams and scored points based on how players did in actual games.
But companies such as DraftKings and FanDuel have set up online daily and weekly games based on a similar concept in which fans pay an entry fee to a website — 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.
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 professional sports teams and leagues and major media companies.
Read MoreFormer pro poker player makes a living on fantasy sports
Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots have stakes in DraftKings, which recently struck a three-year deal with the N.F.L. to become a partner of the league's International Series in Britain, where sports betting is legal. In addition, DraftKings has tapped hundreds of millions of dollars from Fox Sports, and FanDuel has raised similar amounts from investors like Comcast, NBC and KKR.
Between the tens of millions of dollars in television advertising blitzing the airways and the potential for abuse in an unregulated industry, lawmakers now seem willing to examine 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 and not chance, under lobbying from professional sports leagues. The games are allowed in all but five states.
http://www.cnbc.com/2015/10/06/draf...nvestigated-by-new-york-attorney-general.html
New York Attorney General Letter to DraftKings
http://www.nytimes.com/interactive/...torney-general-letter-to-draftkings.html?_r=1
http://www.nytimes.com/interactive/...torney-general-letter-to-draftkings.html?_r=1
Pretty good read here, someone might want to post the whole thing.. This guy who started the controversy win rate is absurd.
http://larrybrownsports.com/fantasy/ethan-haskell-draft-kings-fanduel-profile/276741
http://larrybrownsports.com/fantasy/ethan-haskell-draft-kings-fanduel-profile/276741
Yeah this is the problem when people write about DFS who know nothing about it.
Of course he is going to play on FD, he can't play on DK and the other sites are way smaller.
As far as the win chart, he is putting multi entries into tournaments, you don't know how many of his entries are doing terrible. RotoGrinders doesn't even have that info.
He had 3 first place finishes in the span of a month. Hardly crazy stuff.
He is pumping tons of entries into tourneys every single night. Should he be allowed to do that? Probably not, no need for conflict of interest but those results alone that are posted in the article pretty much have no value.
Unfortunately this is what happens when people comment on an industry they know nothing about.
Working in the industry and playing everyday, I'd guess Ethan is a pretty good tourney player, knows what to do, etc. Also for MLB the ownership % can't really help you on FD because lineups lock at 7 and you can't get reliable DK info until lineups lock since most people make their lineups in the last 20 minutes.
Still feel that way now that the NY AG is looking into all this? My take on it is that these sites are striking why the fire is hot. I think all these sites know and realize its just a matter of time before more states start to ban them or the Government steps into this. This much is for sure, say goodbye to either site getting an IPO anytime soon...
Conclusion
The numbers seem suspicious to me, and the fantasy games are probably making the right move by preventing employees from playing on their own and competing sites. What do you think?
How could the author say the #'s are suspicious to him when he demonstrates in the article he knows nothing about the industry? That would be like me saying Lockheed Martin's rockets are highly defective when I know nothing about space equipment manufacturing.
If people don't wanna play until more regulation comes then that is fine, but not every negative article you read is going to be factual is all I am saying.
The numbers seem suspicious to me, and the fantasy games are probably making the right move by preventing employees from playing on their own and competing sites. What do you think?
How could the author say the #'s are suspicious to him when he demonstrates in the article he knows nothing about the industry? That would be like me saying Lockheed Martin's rockets are highly defective when I know nothing about space equipment manufacturing.
If people don't wanna play until more regulation comes then that is fine, but not every negative article you read is going to be factual is all I am saying.
I dont even play DFS and I realize this is all a bunch of bullshit.
You gotta a guy who had premium info that was good info to have but hardly anything that assured winning 350K
He really got lucky to be honest.
He could have that same secret info for the next 10 years and never win 350K again.
The people writing these stories are making it out to be like this stuff is so rigged like someone putting helium in lottery balls or something and rigging the lottery.
The guy had some info that other people did not have.
Even with this info it did not increase his odds of winning 350K more then maybe .oooo1%.
Should this guy have this info and nobody else? NO
But the whole industry should not come down just because of one guy that took advantage of his position in the company to have this information.
Im sure people who are good at this stuff can probably figure out the ownership % of each player to around probably 5%.
Yes the industry needs to tighten some things up but the over reaction is out of hand.
Lets not compare this to a super user on a poker site who can see hold cards.
Thats not even close to the same thing.
This fantasy football based on live events that happen in front of our eyes.
It cant be rigged unless someone has a Biffs sports almanac.
The only way it could be rigged is if the lineups are not published for all to see once the first kickoff takes place.
From what ive been told all that info is viewable to the public so I dont see the fuss.
I can understand people from the New York Times not having a clue what they are talking about but im kind of shocked at what im reading from some of the sports minded people that post on this forum.
You gotta a guy who had premium info that was good info to have but hardly anything that assured winning 350K
He really got lucky to be honest.
He could have that same secret info for the next 10 years and never win 350K again.
The people writing these stories are making it out to be like this stuff is so rigged like someone putting helium in lottery balls or something and rigging the lottery.
The guy had some info that other people did not have.
Even with this info it did not increase his odds of winning 350K more then maybe .oooo1%.
Should this guy have this info and nobody else? NO
But the whole industry should not come down just because of one guy that took advantage of his position in the company to have this information.
Im sure people who are good at this stuff can probably figure out the ownership % of each player to around probably 5%.
Yes the industry needs to tighten some things up but the over reaction is out of hand.
Lets not compare this to a super user on a poker site who can see hold cards.
Thats not even close to the same thing.
This fantasy football based on live events that happen in front of our eyes.
It cant be rigged unless someone has a Biffs sports almanac.
The only way it could be rigged is if the lineups are not published for all to see once the first kickoff takes place.
From what ive been told all that info is viewable to the public so I dont see the fuss.
I can understand people from the New York Times not having a clue what they are talking about but im kind of shocked at what im reading from some of the sports minded people that post on this forum.
