Fantasy sports employees bet at rival sites using inside info

Employees from the popular daily fantasy sports sites DraftKings and FanDuel are accused to using insider information to win large jackpots on their rivals’ sites, according to The New York Times. The allegations further incited the debate about whether betting on fantasy sports is a more serious offense than illegal sports gambling – and whether it should be regulated.

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Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works September 9 at his station at the company’s offices in Boston. While there isn’t any proof that the employee directly benefited from his access to that information or its release, it certainly looks bad, akin to insider trading on the stock market.

The company told the Times that the employee published the data by accident and did not profit from it. However, the same employee also won $350,000 at rival site FanDuel last week, DraftKings told the Times. Critics have complained that the setup is hardly different from Las Vegas-style gambling that is normally banned in the sports world.

Both DraftKings and FanDuel had prohibited their employees from playing on their own company sites, but they do not restrict them from playing elsewhere.

Though Haskell won over a quarter-million dollars the same week he leaked the data, the companies said “we have no evidence that anyone has misused [the data]”. “Employees with access to this data are vigorously monitored by internal fraud controls teams, and we have no evidence anyone misused it”. “Any audit process? The inability of the industry to produce and clear and compelling answer to these questions to anyone’s satisfaction is why it needs to be regulated”.

As detailed by Legal Sports Report, the integrity of the game comes down to one concerning mishap.

Meanwhile, a New Jersey congressman has asked for a hearing on the legal status of daily fantasy sports, the commissioner of the NCAA’s Southeastern Conference has barred daily fantasy site ads on the SEC Network, and the casino industry’s American Gaming Association is looking into the industry as part of a broader look at legalizing sports betting beyond a few states.

The Times said that the data released by the DraftKings manager, Ethan Haskell, showed what players were most used in lineups submitted to the site’s Millionaire Maker contests.

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

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.

FanDuel was started in 2009, and DraftKings in 2012.

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

MLSE chief commercial officer David Hopkinson said the company plans to build a new “interacitve zone” at the Air Canada Centre to give fans access to set their lineups and play DraftKings fantasy in the arena.

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

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“You have information that is valuable and should be tightly restricted”, said Grove.

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