The daily fantasy sports industry (DFS) — projected to bring in over $US2 billion in entry fees this year and
over $US14 billion in 2020 — is facing some heavy controversy.
In a story that first broke on the industry blog DFS Report, information security in the high-stakes game is being questioned.
According to a New York Times report published Monday, DraftKings and FanDuel, two of the biggest companies in DFS, are mired in “what amounted to allegations of insider trading, that employees were placing bets on information not available to the public.”
It went down like this.
As explained by Chris Grove at the trade journal LegalSportsReport,
a DraftKings employee allegedly “inadvertently released data” about DraftKings’ biggest tournament before the NFL games started, which showed “the prevalence of particular players across all submitted lineups for the contest.”
That’s of pretty serious consequence, since in DFS, you’re selecting from the same pool of players as all other users. As was explained to us earlier, if you’re going to win DFS tournaments against thousands of other players, you need to find overlooked players that are going to perform — giving a huge advantage to anybody who has perfect information about how players are being selected.
But DFS carriers are now firing back at those allegations.
Today, in a statement to Tech Insider, DraftKings denied that its employee could have used information that gave him an unfair advantage on FanDuel. Here’s the company’s full statement, with our own line spacing and emphasis added for readability:
There has been some confusion regarding a recent piece of data that was inadvertently posted on DraftKings’ blog containing information about players and fantasy games. Some reports are mischaracterizing the situation and implying that there was wrongdoing. We want to set the record straight.
For the last several days, DraftKings has been conducting a thorough investigation, including examining records of internal communications and access to our database, interviewing our employees, and sharing information regarding the incident with FanDuel.
The evidence clearly shows that the employee in question did not receive the data on player utilization until 1:40 p.m. ET on Sunday, September 27. Lineups on FanDuel locked at 1:00 p.m. that day, at which point this employee (along with every other person playing in a FanDuel contest) could no longer edit his player selections.
This clearly demonstrates that this employee could not possibly have used the information in question to make decisions about his FanDuel lineup. Again, there is no evidence that any information was used to create an unfair advantage, and any insinuations to the contrary are factually incorrect.
And here’s the joint statement from the Fantasy Sports Trade Association, FanDuel, and DraftKings, again with added line spacing and emphasis:
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.
So while DraftKings denies “unfair advantage,” both it and Fanduel have decided “to prohibit employees from participating in online fantasy sports contests for money.”
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