Employees of FanDuel and DraftKings could be using inside information to win big money on rival sites

There may be some major misconduct at DraftKings and Fanduel, the two biggest daily fantasy websites.

Last week, a user on a fantasy sports forum noticed a DraftKings employee released data on player ownership for DraftKings’ biggest contest before all NFL games involved in the contest had been finalised.

Knowing this information could be used to give savvy players an advantage in a game with real money on the line.

Worse yet, the DraftKings employee responsible for the accidental leak had won $US350,000 the previous week on rival site FanDuel.

Critics began to fear that if employees or others were to use early access to this information, it could be a threat to the integrity of daily fantasy sites.

The two companies, which have already been criticised for operating unregulated on a barely-legal business model, issued a joint statement to address the claims that their employees are using insider info. Regarding the potential for fraud, the statement says:

Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.

The statement also notes that the companies aim to review internal policies and “work with the entire fantasy sports industry” on the issue in question.

The daily fantasy sports model — which allows bets to be placed on fantasy teams chosen many times within a single season — has recently grown into a massive industry thanks to partnerships with the MLB and NFL, not to mention enormous marketing campaigns. One research firm estimated that the industry would generate $US2.6 billion in entry fees in 2015, according to The New York Times.

The reason that daily fantasy sites get away with betting on sports outcomes is because of a 2006 law which establishes most fantasy sports as games of skill rather than chance. However, Adam Krejcik, the director of a research firm studying fantasy sports, told The Times that even if this particular instance were an honest mistake, “[it] certainly does not look good from an optics standpoint and it strengthens the case for additional oversight and regulation.”

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