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

[doubledeuce22]

Anyone else feel a class action lawsuit coming up?

and we're off ....

http://m.huffpost.com/us/entry/5616da63e4b0e66ad4c71e4e?yrvpwrk9


The scandal that has engulfed the daily fantasy sites DraftKings and FanDuel could now head to federal court.
A Kentucky man on Thursday filed a class-action lawsuit against the companies, which run the two biggest websites in the growing daily fantasy industry. First reported by the New York Daily News, the suit alleges that DraftKings and FanDuel violated fraud, negligence and consumer protection laws by allowing employees to access certain information while also participating in daily fantasy contests.
The suit, filed in the U.S. District Court for the Southern District of New York, seeks damages determined in a jury trial. In addition to alleging fraud and negligence, it claims DraftKings, which operates out of New York City, and FanDuel violated New York false advertising and deceptive practices laws and Kentucky consumer protection laws.
The plaintiff, Adam Johnson of Louisville, Kentucky, deposited "at least $100" into a DraftKings account, according to the suit. The complaint asserts that Johnson would not have participated in the contests had he known that each of the companies was allowing its employees to participate in daily fantasy games on the other's website.

 

[BostonBettor]

I'm sure this guy and others like him have been just waiting for an excuse to pounce.

 

[BostonBettor]

I'm sure this guy and others like him have been just waiting for an excuse to pounce.

 

[PatsFan1283]

The 10 mil is a figure based on what they've won and not specifically on one site or another.
It's a whole combined figure with their own site included since employees have indeed played at their place of employment.

Did you find the citation for this?

I haven't seen that accusation/report anywhere.

 

[HacheMan]

Did you find the citation for this?

I haven't seen that accusation/report anywhere.

Somewhere it says 6-10 somewhere with some suggesting lower or higher.

Guess it depends on what the true numbers are overall.

Also, in yet another interview yesterday, a 3 way, on espn, Daniel Wallach specifically brings up the 10 Mil to Robins, and he ignores it but answers a 2nd question comparing fantasy to sports betting.

Wouldn't even ONE Million be too much when you consider the company has only been in existence 3-4 years, things have just picked up in the last year or so, and there likely aren't that many employees overall??

 

[PatsFan1283]

Somewhere it says 6-10 somewhere with some suggesting lower or higher.

Guess it depends on what the true numbers are overall.

Also, in yet another interview yesterday, a 3 way, on espn, Daniel Wallach specifically brings up the 10 Mil to Robins, and he ignores it but answers a 2nd question comparing fantasy to sports betting.

Wouldn't even ONE Million be too much when you consider the company has only been in existence 3-4 years, things have just picked up in the last year or so, and there likely aren't that many employees overall??ng...

All I see is 6-10 for DK people on FD, are you sure that isn't what you mean?

If DK people made even 1M on their own site, that would be a way bigger story than this Ethan thing.

 

[HacheMan]

All I see is 6-10 for DK people on FD, are you sure that isn't what you mean?

If DK people made even 1M on their own site, that would be a way bigger story than this Ethan thing.

Wait, are you thinking I meant they won 6-10 on their own site?

If I typed it that way that's not what I meant.

What I've tried to stress is that they have indeed played on their own site as well, and that would only increase the amounts overall.

Even winning THAT MUCH on the competitor's site doesn't set off a red flag with you pats?

Those guys aren't THAT MUCH better players than a certain percentage of the public so it's clear they are gaining an advantage somewhere...,

 

[PatsFan1283]

The numbers say DraftKings employees have won about $10 Million.

That is a lot and shows that they are making a valiant effort to win their own contests, particularly the ones with huge payouts, which was created for the public, while at the same time reducing the odds of their customers winning.

That is shady plain & simple.

Playing at others sites is fine...

This is the post I was going off of. You say DK employees have won 10M in their own contests and that playing at other sites is fine.

 

[HacheMan]

This is the post I was going off of. You say DK employees have won 10M in their own contests and that playing at other sites is fine.

Yes when i first started hearing the reports & interviews about the numbers, originally thought the amount was for their site since it has/had been established employees were playing at their own site and the interview i saw im almost positive the guy asking the questions gave an amount for their own site.

So much has happened with this story though that i have changed my opinion on whether or not they should be playing at even the main competitors because they have advantages, no matter how big or small one deems them to be
..

 

[PatsFan1283]

Yes when i first started hearing the reports & interviews about the numbers, originally thought the amount was for their site since it has/had been established employees were playing at their own site and the interview i saw im almost positive the guy asking the questions gave an amount for their own site.

So much has happened with this story though that i have changed my opinion on whether or not they should be playing at even the main competitors because they have advantages, no matter how big or small one deems them to be
..

Oh ok, that makes sense.

And yeah, they shouldn't be playing at other sites. 95% of the time it will be on the up and up but there is that other 5% where shady stuff will happen that doesn't need to be risked.

Like I said in previous post, sucks for employees of small sites but that is just the collateral damage.

 

[Wanger]

Florida grand jury investigating daily fantasy operators

http://profootballtalk.nbcsports.co...d-jury-investigating-daily-fantasy-operators/

 

[HacheMan]

Report: US Attorney In Florida Convening Federal Grand Jury For Daily Fantasy Sports

“I learned of the investigation late in the day on Friday,” Wallach told Legal Sports Report on Saturday. “I cannot reveal how I found out, but the information was unassailable in my opinion, especially given the recent cryptic comments made by Florida’s attorney general. I had heard rumors of an ongoing federal criminal investigation— they had been circulating since August — and what I ultimately came to learn on Friday finally connected all the dots. I would not have broken the story on Twitter unless I was absolutely convinced of the accuracy of the information. And I was.”

“Florida has always represented an elevated level of risk for the DFS industry, even if operators refused to acknowledge it (until now). Unlike most states, where legality turns on the skill vs. chance question, Florida’s statute plainly encompasses skill-based contests,” Wallach continued. “The key question under Section 849.14 is whether there is a “stake,” “bet” or “wager,” and, under the 1991 Attorney General’s opinion (and subsequent opinions), the answer would appear to be “yes” in the DFS context if there is any correlation between entry fees and prizes awarded. Then add Florida’s current political climate into the mix (including the debate over gambling expansion) and you have the right environment for a prosecution. The industry should have seen this coming.”

Another source has confirmed to Legal Sports Report that the grand jury has been convened and a prosecutor assigned to the case. No further details about the grand jury and its investigation were available.

Update: StarsDraft — the DFS platform owned by PokerStars parent company Amaya — has stopped accepting customers on its site. Florida has been added to its list of restricted states. More below.

Below is a collection of questions and answers regarding the report. Article will be updated as events warrant.


What does a grand jury do?

A grand jury is a legal body that is brought together to investigate possible criminal wrongdoing, and if criminal charges should be brought. In this case, the grand jury in question is a federal one, and would consist of 16 to 23 jurors.
Just starting a grand jury does not imply that any wrongdoing has actually taken place.

“Convening a grand jury is certainly one way for a federal prosecutor to gather factual evidence necessary to reach a decision on whether federal law has been broken,” attorney Jeff Ifrah told Legal Sports Report. “In this particular case, the issue appears to be more of a legal question rather than a factual one, in which case you might expect the use of subpoenas or a series of meetings with the industry, rather than witness testimony and document analysis.”

Grand jury proceedings take place in secret, so we likely won’t find out what or who has been investigated, unless there are charges brought. Grand juries are not a fast process, so even if it’s going on now, we probably won’t hear charges for months, if charges are brought at all.


What operators are involved?

We have no direct confirmation of the grand jury convening and therefore no details regarding which operators may be involved.

A FanDuel spokesperson responded with “no comment” when asked about the report. DraftKings did not immediately respond to a request for comment on Saturday.

“At this point in time, it would be improper to jump to any conclusions concerning the implications of a reported federal grand jury investigation as to whether the Illegal Gambling Business Act of 1970 has been violated by any fantasy sports operators,” Darren Heitner, a Sports and Entertainment Lawyer and owner of HEITNER LEGAL, told LSR. “There is certainly enhanced focus on the industry at the moment, with politicians and influential attorneys seeking to explore if and/or how daily fantasy sports operations comply with existing federal and/or state laws. This is just the latest in a string of developments that will keep a heavy focus on the practices of FanDuel and DraftKings in the immediate future.”


What sites operate in Florida?

Most major sites do, including DraftKings and FanDuel. StarsDraft became the first site to leave Florida in the wake of this news, sending the following email to customers:

For now, we are not able to accept deposits or allow Florida users to enter contests. Florida customers will have access to login to their accounts and the ability to request withdrawals via the StarsDraft platform. As one of the most licensed online gaming operators in the world, we review each potential DFS market on a case-by-case basis. Please know this decision was not made lightly. We will continue to review the opportunity to provide StarsDraft in Florida and hope to be able to offer StarsDraft to our Florida customers with clarity and confidence in the future.

Star Fantasy Leagues also told Legal Sports Report that it would be leaving the state.
FanDuel has an office in Orlando. CBS, which operates SportsLine, has offices in Fort Lauderdale.
Attorney Marc Edelman claimed that some DFS sites do not operate in Florida:


Marc Edelman @MarcEdelman

In some cases, nothing. More than 20% of #DFS companies already dodn't operate in Florida. Food for thought.https://twitter.com/LSPReport/status/652649931728097281 …



None of the 20+ sites listed in our DFS Site Standings appear to block players from Florida.
DraftKings’ and FanDuel’s presence in Florida

DraftKings, FanDuel and the Fantasy Sports Trade Association began lobbying efforts in the state in August. At the time, there was no proximate, visible reason for lobbying efforts to begin in the state, other than the murkiness surrounding the legality of DFS that you can read about below. At the time, FSTA chairman Peter Schoenke confirmed the retention of Ballard to Legal Sports Report and outlined the reasons behind the move.

“We continue to boost the FSTA’s resources in states with a large number of fantasy sports players to ensure that residents there can continue to fully play fantasy sports,” Schoenke said. “And certainly there’s an added benefit with both CBS and FanDuel and several more fantasy sports companies having operations in the state.”

According to the Miami Herald, 10 lobbyists are retained in the state by DraftKings and FanDuel, with some of those also representing the FSTA. Also from the Herald:

While the Fantasy Sports Trade Association is new to Tallahassee, they are already wise to the money game, donating $10,000 each in the last two weeks to four of the biggest players in the state’s discussion on gambling. That group gave checks to political action committees run by House Speaker Steve Crisafulli and the chairman of the House Regulatory Affairs Committee, Jose Felix Diaz, R-Miami. In addition, PACs run by Rep. Matt Gaetz, chairman of the Finance and Tax Committee, and Sen. Jack Latvala, chairman of the Senate Appropriations committee handling economic development issues, also got donations.

Right now, there is no actual legislation dealing with daily fantasy sports on the table.
What is the IGBA?

The Illegal Gambling Business Act (IGBA) is a federal law enacted in 1970 as part of a broader suite of laws designed to target gambling operations connected to organized crime. You can read the entire text here.
IGBA requires three conditions to be met in order for a violation to be triggered:

(1) “illegal gambling business” means a gambling business which—
(i) is a violation of the law of a State or political subdivision in which it is conducted;
(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and
(iii) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

Read more on IGBA and how it might apply to DFS from attorney and SI.com writer Michael McCann here.


Has IGBA been used against online gaming companies before?

IGBA was among the charges asserted by federal officials in the Black Friday indictments leveled against online poker sites in April 2011.

For a bit more color on the IGBA charge, see PokerStars’ motion to dismiss from 2012.
Followers of online poker will likely also remember United States v. DiCristina, in which the defendant argued that poker is a game of skill.

The circuit court overturned a lower court’s ruling, saying that the amount of skill in a game is immaterial to application of the IGBA. The Supreme Court declined to hear another appeal.
What does Florida law say about DFS?

Like most states, the legality of daily fantasy sports in Florida isn’t as easy as pointing to a law that says “yes it is” or “no it isn’t.” Several lawyers that follow the gaming space believe it’s a huge gray area for DFS operators.

“If I were asked to write a legal opinion letter, I would have to tell a client to stay out of Florida or to understand that I would need to disclose the risk,” Edelman told Legal Sports Report.


Here’s a look at what’s in play under state law:
Relevant statute: 849.14

Here is the text of the law that might be applied to DFS:

849.14 Unlawful to bet on result of trial or contest of skill, etc.—Whoever stakes, bets or wagers any money or other thing of value upon the result of any trial or contest of skill, speed or power or endurance of human or beast, or whoever receives in any manner whatsoever any money or other thing of value staked, bet or wagered, or offered for the purpose of being staked, bet or wagered, by or for any other person upon any such result, or whoever knowingly becomes the custodian or depositary of any money or other thing of value so staked, bet, or wagered upon any such result, or whoever aids, or assists, or abets in any manner in any of such acts all of which are hereby forbidden, shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

Wallach broke down the issue of Florida’s DFS legality in a blog post earlier this year. Florida is not a “skill vs. chance” state like most; the above statue addresses contests of skill. At issue is whether stakes, bets, or wagers cover daily fantasy sports. That brings us to the opinion of the attorney general’s office.

Attorney general opinion

The legality of fantasy sports in Florida appears to hinge largely on an opinion from the attorney general’s office in the 1990s. From Wallach’s blog:

While there are there no Florida statutory provisions that directly address the legality of fantasy sports, the Florida Attorney General has weighed in on this issue, albeit, more than 20 years ago. On January 8, 1991, then-Attorney General Robert A. Butterworth issued an advisory opinion concluding that Section 849.14, Florida Statutes “prohibits the operation and participation in a fantasy sports league whereby contestants pay an entry fee for the opportunity to select actual professional sports players to make up a fantasy team whose actual performance statistics result in cash payments from the contestants’ entry fees to the contestant with the best fantasy team.”


Edelman, in a much earlier paper on the legality of DFS in Florida, agreed with Wallach’s take:Third, fantasy host sites face greater risk of gambling liability in the states of Florida and Louisiana because, in these states, their attorneys general have already issued advisory opinions cautioning against certain fantasy games.” In Florida, former Attorney General Robert A. Butterworth published an advisory opinion in January 1991 that concluded it was illegal to “participat[e] in a {draft-based} fantasy sports league whereby contestants pay a fee for the opportunity to select actual professional sports players.”


The use of a 1991 opinion in deciphering the legality of DFS might sound strange, but Wallach breaks down why it matters: “Although not binding on a court, an attorney general’s opinion ‘is entitled to careful consideration and generally should be regarded as highly persuasive.’ ”

“The most interesting result that may come out of enhanced scrutiny in my home state of Florida is a new guide as to what types of operations are and are not deemed legal within the state,” Heitner said. “Many of the largest daily fantasy sports and more traditional fantasy sports operators provide their services to users based within Florida’s borders.

“However, Florida Statute 849.14 has been deemed by Florida’s Office of the Attorney General (albeit in 1991, prior to the enactment of the UIGEA) to prohibit “the operation and participation in a fantasy sports league whereby contestants pay an entry fee” for the opportunity to win cash prizes,” Heitner continued. “I do not expect retroactive punishments based on a violation of the statute, but instead hope that the industry gains knowledge as to Florida’s true stance on the subject.”
Interestingly, FanDuel CEO Nigel Eccles weighed in on the legality of DFS in Florida in aRotoGrinders thread a year ago. From his post:

With regards Florida, that opinion comes from 1991. I don’t believe the laws have changed in Florida since then but the AG certainly has. Note, that Sportsline was founded in Florida in the mid-90’s and CBS has its fantasy sports operations in Florida to this very day.


How does DFS fit into the broader gaming picture in Florida?

All of the nationwide scrutiny of DFS comes as the state of Florida was already taking a closer look at gambling. Currently, Florida allows tribal casinos and horse racing.

The state’s five-year gambling compact with the Seminole Tribe is expiring, meaning just about everything to do with gambling is under the microscope and up for debate. And according to the Miami Herald, that might include DFS:

“They are promoting a product that looks a lot like sports betting,” said Sen. Rob Bradley, a North Florida Republican and lead negotiator on gambling issues in the Florida Senate.


Combined with lobbying by the DFS industry in the state, it seems reasonable to assume we might see legislation soon. Paraphrasing Bradley, the Herald said it was “too early to tell how that conversation will go,” referring to how the legislature might handle DFS.


http://www.legalsportsreport.com/488...ampaign=buffer

 

[HacheMan]

Fantasy Sports Could Pose Real Problem in Florida

flanews.com


If you’ve watched even a little bit of a sporting event this year, you’ve probably seen a commercial for companies DraftKings and FanDuel. As Matt Galka tells us, the fantasy sports businesses could create plenty of real problems in the state.

The advertisements are almost unavoidable.
Daily fantasy sports companies Draft Kings and FanDuel hock the chance to win big bucks from a small deposit and depend on the outcomes of sporting events.

A contestant picks a fantasy sports team and wins based on player performance. But Florida State gambling law professor Marc Dunbar says the “games of skill” exemption – which separates the companies from traditional games of chance gambling – doesn’t apply in Florida.

“There’s pretty much no question, they’re illegal the way they operate under Florida law,” he said.

A 1991 opinion from former Attorney General Bob Butterworth specifically prohibits fantasy sports wagers. The opinion was released well before Daily Fantasy Sports were established.

The Florida Senate’s Regulated Industries Chairman Rob Bradley (R-Fleming Island) says the companies haven’t gone unnoticed
“The way that they are marketing those products, it certainly looks like what they’re advertising is something akin to traditional sports betting,” said Sen. Bradley.

Bradley says he only has preliminary thoughts and hasn’t focused much on what, if anything can be done. But both Draft Kings and Fan Duel are digging in for a potential battle. Both companies have hired the same team of heavy hitting Tallahassee lobbyists in preparation for 2016’s legislative session.

We reached out to both DraftKings and FanDuel but we have not received comment back yet. The Attorney General’s office told us in a statement that they are “not currently investigating the companies.”

 

[memphis]

these guys running these "companies" have found the ultimate loophole and by the time it gets fixed they'll be billionaires.

 

[HacheMan]

Great interview that sums up everything going on with DFS lately & belief why this all leads to Sports Betting legalization within 5 years....



<iframe frameborder='0' width='512' height='330' scrollable='no' src='http://www.c-span.org/video/standalone/?328540-6/washington-journal-daniel-wallach-fantasy-football-pay-sites'></iframe>

 

[HacheMan]

[h=1]Lawmakers may spoil fantasy sports party[/h]The biggest showdown looming for fantasy football goliaths DraftKings and FanDuel has nothing to do with which one can nab the biggest share of the exploding daily fantasy sports market.

Instead, state and federal lawmakers are taking a serious look at the legality of their services—a move that could put them out of business in Indiana and other states.

Arizona, Iowa, Louisiana, Montana and Washington have already deemed the Web-based contests to be illegal gambling, and Indiana legislators expect to take up the issue in the 2016 session of the General Assembly.

“I see their ads everywhere and I say it looks an awful lot like a form of gambling to me,” said Senate Appropriations Chairman Luke Kenley, R-Noblesville.

“I’m surprised someone—the attorney general or the Marion County prosecutor—hasn’t reacted publicly yet,” Kenley said. “I think it’s something we need to look into because it’s something we need to safeguard Indiana citizens against.”

Federal lawmakers are examining the issue as well, fueled by accusations of insider trading. A mid-level manager at DraftKings recently won $350,000 playing fantasy football on FanDuel. His victory closely coincided with a data leak at DraftKings that could have given him an unfair advantage over other FanDuel players.

DraftKings has insisted no advantage was gained, but it has prohibited its employees from playing on another pay fantasy site.

Now, U.S. Rep. Frank Pallone, D-New Jersey, is demanding a review of the sites’ legality. And while some observers think states will wait to see what is done at the federal level, Kenley said the Indiana General Assembly won’t.

“If the state feels like it’s an intrusion on state residents, I think state lawmakers would do something—whether the feds do something or not,” he said.

Industry growing fast

Daily fantasy sites have escaladed from an industry that three years ago had entry fees in the tens of millions of dollars to one that this year will generate $3.5 billion, according to Legalsportsreport.com.

Fans pay to compete and draft players for their teams—working under a salary cap—for daily or weekly games in professional basketball, football, baseball and other sports. Fans then compete against one another and can win thousands of dollars—even up to $1 million. The sites also offer rookie leagues to encourage newcomers.

The companies have been around for years, but today, TV viewers can’t turn on ESPN or any other sports station without being bombarded by DraftKings and FanDuel ads. According to Ad Age, the two firms spent more than $107 million in TV advertising in September alone.

Both have dozens of sponsorship deals with teams and leagues. FanDuel has multiyear deals with the Indiana Pacers and Indianapolis Colts.

While officials for Boston-based DraftKings and New York-based FanDuel did not reply to requests for comment for this story, they’ve repeatedly argued their Web-based businesses are not gambling because the outcomes are based on players’ skill.

Michael Smith, CEO of the Casino Association of Indiana, isn’t buying it.

“Anytime you put money up like this … it looks like gaming to me,” he said.

The distinction is important. In Indiana—and other states—gambling is unlawful until it is specifically legalized and regulated.

Defenders of DraftKings and FanDuel compare putting money in fantasy leagues to investing in the stock market. That’s nonsense, Smith said.

“With the stock market, you can take your money off the table,” he said. “Not with a bet. So this is a bet. You could argue it’s pari-mutuel wagering. But it’s definitely a bet.”

In pari-mutuel wagering, players essentially bet against one another and the winner takes the pool of money—minus what the house takes out for managing the game. Betting on horse racing is a form of pari-mutuel gambling.

Smith said there’s no more skill needed to play on DraftKings or FanDuel than there is to play poker or blackjack—both of which are considered gambling and are regulated in Indiana.

Robin Babbitt, a partner in the law firm Ice Miller who specializes in gambling, business litigation and government affairs, said DraftKings and FanDuel “are certainly illegal under Indiana law as it pertains to Internet wagering.”

Some states allow wagering on contests that involve more skill than luck. Indiana’s law, however, says gambling occurs when an individual risks money or other property for gain—contingent in whole or in part upon chance.

“There’s a big debate about the level of skill versus chance needed to win at these things,” Babbitt said. “But I think you could argue there’s certainly some element of chance.”

Regulated or outlawed?

The Casino Association board had its first discussion on Oct. 7 about daily fantasy companies, Smith said. So far, the association hasn’t taken a position.

But Smith, a former Republican lawmaker, said pay-to-play fantasy leagues need to be regulated.

“The legality of this is a question for policymakers; it’s hard for me to tell people what to do with their money,” Smith said. “But it needs to be regulated to assure it’s legitimate. The integrity of the game is key. We favor stringent regulations for all gaming.”

Some casinos and horse-racing tracks have voiced concerns that fantasy leagues are taking bettors—especially much-sought-after young gamblers—from their establishments.

But Smith doesn’t see pay-to-play fantasy leagues as competition. In fact, he said if the leagues are legalized and regulated, some Indiana casinos and racinos would likely launch their own fantasy games or partner with existing leagues.

Earlier this year, Rep. Alan Morrison, R-Terre Haute, introduced House Bill 1074, which would have permitted Hoosier Park Racing & Casino in Anderson and Indiana Grand Racing and Casino in Shelbyville to offer fantasy sports games.

Though the bill didn’t gain traction, Morrison is expected to champion that cause—or some form of legalizing fantasy sports betting—again in 2016.

“I would argue this isn’t an expansion of gaming; it’s an enhancement to our existing facilities,” Morrison said of his proposal.

He said his goal isn’t to be “heavy-handed” with existing fantasy leagues, but to “open it up” to allow Indiana casinos and racinos to profit off the burgeoning business.

“Those facilities employ a lot of people in this state,” he said.

If states legalize and regulate fantasy sports betting, not only can they try to ensure the contests are run fairly for participants, they can also tax them.

But the promise of more revenue isn’t likely to sway Republican Gov. Mike Pence.

“Right now, you’ve got a governor’s office that simply doesn’t want to see an expansion of gambling,” said Ed Feigenbaum, publisher of Indiana Gaming Insight and Indiana Legislative Insight.

While Pence couldn’t be reached for comment for this story, he wouldn’t be alone if he opposed fantasy wagering.

“I don’t think we need to expand gambling in the state of Indiana,” Kenley said. “We need to make sure we’re not making gambling overly enticing to Indiana residents and we need to make sure it’s done in a legal and wholesome environment.”

Behind-the-scenes debate

It’s not clear that the governor, Attorney General Greg Zoeller and the Indiana Gaming Commission “are on the same page,” Feigenbaum said. Their interpretations of what is and isn’t gambling might be “a little different” from one another's, he said.

The governor, Feigenbaum said, thinks that if a contest has an element of chance, it’s gambling; the attorney general has indicated that, if there is more skill than luck, it might not be gambling.

“I think you’ll see this come to a head in the next couple of months,” Feigenbaum said.

An official for Zoeller declined comment.

A behind-the-scenes debate among the offices of the governor, attorney general and gambling commission continues, sources said.

Meanwhile, Sara Tait, executive director of the Indiana Gaming Commission, said she is monitoring developments closely.

“The issues associated with these activities are multi-layered and complicated, with interpretations of both state and federal law in play,” Tait said.

Even if state lawmakers or the attorney general deem pay-to-play fantasy sports illegal, Hoosiers playing DraftKings and FanDuel might have little to worry about.

“Would a prosecutor prosecute players for this? It would certainly be a big story if they did,” Babbitt said. “But they probably have bigger fish to fry.”

Feigenbaum said the fantasy companies are more likely targets. FanDuel and DraftKings have been successfully dissuaded from doing business in Arizona, Iowa, Louisiana, Montana and Washington—the states that declared their services illegal.

“It certainly can be stopped if state lawmakers and prosecutors really want to,” Feigenbaum said. “In the late 1990s, state Attorney General [Jeffrey] Modisett made it clear there was going to be no Internet gambling in Indiana. He sent notices to gambling sites and went after them. The same could be done here.”•

 

[HacheMan]

In Fantasy Sports, Signs of Insiders’ Edge


Weeks before a leak of inside information led state investigators to question whether daily fantasy football games were a fraud, misleading thousands of players vying for millions of dollars in prize money, Madison Calvert, a regular player, became suspicious.
At a private party for DraftKings, one of the biggest daily fantasy websites, Calvert said, he discussed his baseball contest choices with a host, Jon Aguiar, an executive of the site, who suddenly made a quick check on his phone and, to Calvert’s surprise, informed him that his pick of a pitcher was a poor choice because many other players had selected him.
“I shouldn’t have pulled that up in front of you, ha-ha,” Calvert said Aguiar told him.
That was days after Calvert, 29, had repeatedly been challenged for head-to-head play in another game, on the website FanDuel, by a Rick Sawyer. After checking a search engine, Calvert said, he found that Sawyer was actually a business planning manager at DraftKings.

“I could only think that he had watched my DraftKings account and had me pegged as a suboptimal player,” Calvert said. “I felt like a moron.”


Calvert said it was “pretty obvious that with insider information and access to top players,” players like him would not have a chance in the long run.
Calvert is not the only one raising doubts about the clubby, cozy connections between the two companies at the head of the booming, unregulated, multibillion-dollar daily fantasy industry, in which players pay a fee on a website, assemble virtual rosters of players and then, in pursuit of jackpots ranging from $22 to $2 million, score points based on the real-world outcomes of professional games.
The New York State attorney general’s office began an inquiry last week into whether employees of DraftKings or FanDuel had used inside information to prey on customers on each other’s sites, and a class-action lawsuit was filed in federal court in New York on Thursday, alleging fraud. Lawmakers and analysts are also calling for some form of regulation for an industry that has had explosive growth in the last few years.


Representative Dina Titus, Democrat of Nevada, wants Congress to re-examine theUnlawful Internet Gambling Enforcement Act of 2006, which deemed the games legal. Titus told the House Committee on Energy and Commerce in a letter that it was critical for Congress to “investigate this growing industry.”
But records and interviews show a long-held pattern of overlapping interests and close relationships among employees at the companies — many of whom regularly rank among the most consistent big winners — and in some cases investors, which include Major League Baseball, the N.B.A. and two N.F.L. owners, as well as media giants like NBC, its parent Comcast and Fox.
Andre Bessette, a manger of analytics at DraftKings, is currently ranked No. 40 and won a $50,000 first prize in a FanDuel contest, the 2015 World Fantasy Hockey Championship.
Matthew Boccio, who sets player prices at FanDuel, is among the highest-ranked of all fantasy players, according to the website RotoGrinders, and was awarded $50,000 in June for winning DraftKings’ King of Boston contest. Soon after, he was the subject of an article on FanDuel titled “Look Inside the Belly of a DFS Whale,” in which he shared tips, including avoiding players like himself.


Employees Barred
Both companies have announced that they have permanently barred their employees from competing in daily fantasy sports and have brought in high-profile former federal prosecutors to conduct an independent investigation. ESPN dropped segments sponsored by daily fantasy sites.
DraftKings, which issued a statement Friday seeking to reassure fans about the integrity of the game, declined to make Aguiar or Sawyer available for comment, as well as other employees who have kept a high profile on the competitive daily fantasy circuit. The company said it would not respond to detailed questions about its employees or policies while its internal investigation was underway.


“Our objective is to be completely transparent with our findings, and we expect that we will be able to report on the results of that review in the next few weeks,” it said in a statement.
Likewise, FanDuel said it would have no further comment on its employees or practices.
Yet both companies have acknowledged that they recruited many of their employees from the pool of devoted daily fantasy sports enthusiasts and allowed them to play the games, in the kind of potential conflict of interest generally avoided in other industries that handle sensitive information.
Last month at a conference at Babson College near Boston, a DraftKings founder, Paul Liberman, said barring employees from playing could make it difficult to retain talent.
“We have some people who make significantly more money off of our competitors’ sites than they do working for DraftKings,” he said.
In fact, Aguiar, a former professional poker player and an early star in daily fantasy sports, was brought into DraftKings to court top players in an effort to expand the high end of the business.
To lure everyday players and stoke big hopes, the sites depend on these big-winning sharks, as the highly skilled and large-volume players are known. Part-time minnows and other low-volume enthusiasts who do not win much make up most of the rest of the field, similar to the situation at casinos.
Advertisements for both companies feature 20-somethings near tears after winning life-changing bounties, but the fine print on the television ads states that winnings actually average $22.
A recent study in Sports Business Daily found that over the first half of this year’s Major League Baseball season, 91 percent of daily fantasy sports player profits were won by just 1.3 percent of the players. In fact, on average, the top 11 players paid $2 million in entry fees and made profits of $135,000 each while accounting for 17 percent of all entry fees.
Many of those players use automated processes that let them change hundreds, if not thousands, of lineups in seconds, a decided advantage when last-minute changes are made in the real lineups of professional football, basketball or baseball teams.
“It’s a great recreational game, but financially it’s not a wise investment for people,” said Dan Singer, who leads the sports and gambling practice at the consulting giant McKinsey & Company and was an author of the Sports Business Daily study.


Charting Top Players
On RotoGrinders, a site that closely follows the fantasy sports industry, the exploits of the top players — many of them employees of DraftKings or FanDuel — are charted, ranked and followed in fan-boy fashion. Neither company would say how much its employees had won, but Justine Sacco, a spokeswoman for FanDuel, said DraftKings employees had won less than $10 million in her company’s contests.


There have also been complaints that some of the automated programs can exploit weaker players by identifying them and getting into competitions with them ahead of everyone else.
DraftKings declined to discuss its policies on using automated processes, which are called scripting. FanDuel said that it had put some restrictions on the programs — including prohibiting last-minute automated lineup changes — but that it reviewed requests for them individually.
Access to inside information by employees of the two companies has been questioned before in forums, in part because neither DraftKings nor FanDuel has given any details on what safeguards are in place to protect their data.
Leonard Don Diego first worked at FanDuel but is now an engagement manager at DraftKings. A year ago, he was accused of sharing lineups, according to a RotoGrinders thread.
Don Diego denied that he had passed on information.
The recent scandal was ignited after Ethan Haskell, a DraftKings employee, admitted to releasing inside information.
In promotional pictures for the site, he looks like those rapturous winners holding oversize checks in the company’s television commercials. He has a ball cap on backward and a loving-life grin that might appeal to the many young postcollege players who dominate the demographic that is powering daily fantasy sports’ growth.
More than a week ago, Haskell admitted on a blog post that he had released “player owned percentages” — by mistake, he said — before all the lineups for the third week of N.F.L. games were locked up. The data showed which players — included in more than 400,000 entries — were most commonly selected in lineups submitted to the site’s Millionaire Maker contest.
That week, he won $350,000 on the rival FanDuel site, but DraftKings said he had done so without benefit of inside information. He also won one of 120 seats at FanDuel’s $12 million World Fantasy Football Championship. There he will have the opportunity to win a $3 million first-place check, and he is guaranteed at least $20,000 for showing up, even if he finishes last.
Haskell’s big win followed a hot streak in August, when he finished in the top 10 of 13 Major League Baseball contests, including one contest, with a $25 buy-in, in which he beat nearly 13,000 others to win $50,000, according to the website Larry Brown Sports.
Cory Albertson, one of the most successful players in the short history of daily fantasy sports, said that he had long pushed both companies to develop a way to regulate themselves. He has a master’s degree in business administration from Notre Dame and invests more than $10 million annually in one-day fantasy sports. Even though daily fantasy sports operate under an exemption to the Unlawful Internet Gambling Enforcement Act of 2006, which outlawed online poker and sports betting, Albertson said that fantasy sites were a form of gambling and that he believed they should be regulated.
“When there are no internal controls to keep your employees in check in terms of what they’re doing, it’s understandable that many of them would become preoccupied with trying to also just win money playing fantasy sports,” Albertson said. DraftKings and FanDuel are each valued at more than $1 billion and have begun incessant and costly television advertising campaigns to persuade viewers that anyone with an interest in sports can become a millionaire. The networks and sports leagues so far have been stalwart investors or willing partners in sponsorship agreements.
Neither company, however, has turned a profit.
It is unclear whether the scandal will slow the companies’ momentum. Last week, DraftKings and FanDuel both posted their first profitable Sundays of the season in their guaranteed prize games, giving out $39.8 million in winnings but taking in $43.6 million in entry fees, according to SuperLobby, an independent site tracking the industry’s guaranteed-prize games.

“If you are going to purport you are a billion-dollar business, and advertise on billboards and televisions throughout the country, you need to act like a billion-dollar business,” said Marc Edelman, a law professor at Baruch College and Fordham University and an expert on fantasy sports. “And that includes, among other things, putting in place very sophisticated firewalls and controls to prevent these types of instances from happening in the first place.”


Calling It Quits
Calvert, 29, had never thought of himself as a minnow, as part-time fantasy sports players are known. He was lured into daily fantasy six months ago and played more than 9,000 games in many sports, well enough to earn “V.I.P.” status at DraftKings. He said he had played mainly in tournaments with small buy-ins and once had a $9,000 weekend. Over all, however, Calvert said, he lost more than he won.
On Sunday, for the first time in many weekends, he watched N.F.L. games simply as a spectator.
“I’m done,” said Calvert, who is married and works in sales.
By the measures of Singer’s study, Calvert was a big fish among the 5 percent of players who, on average, lost $1,100 on entry fees of $3,600. The true minnows account for 80 percent of the millions of daily players, and they lost, on average, $25 on entry fees of $49.
“The minnows may lose $10 a month and will happily continue to play forever,” Singer said. “But the entire fantasy economy depends on keeping those few big fish.”
After the insider trading allegations surfaced, Calvert emailed Jason Robins, DraftKings’ chief executive and a co-founder, with his complaints. Two days went by without a response.
On Wednesday, he posted his story on Reddit.com. Twenty minutes later, the DraftKings co-founder Matt Kalish called him. On Friday, Robins, Kalish and Liberman — the founders — sent an email intended to mollify their customers, many of whom are concerned.
“Please know how grateful we are for the passion and loyalty you have shown DraftKings throughout our history and especially over the past week,” it said. “You remain our greatest priority.”
Correction: October 11, 2015
An earlier version of this article misspelled the surname of a DraftKings founder. He is Paul Liberman, not Lieberman.


Correction: October 11, 2015
An earlier version of this article misspelled the given name of a successful player in daily fantasy sports. His name is Cory Albertson, not Corey.

http://mobile.nytimes.com/2015/10/12...-football.html

 

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“I could only think that he had watched my DraftKings account and had me pegged as a suboptimal player,” Calvert said. “I felt like a moron.”

 

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this

There have also been complaints that some of the automated programs can exploit weaker players by identifying them and getting into competitions with them ahead of everyone else.

 

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Last month at a conference at Babson College near Boston, a DraftKings founder, Paul Liberman, said barring employees from playing could make it difficult to retain talent.
“We have some people who make significantly more money off of our competitors’ sites than they do working for DraftKings,” he said.