On October 5, 2015, the New York Times blew wide open a story that had begun to spread throughout the Daily Fantasy Sports community.
Both DraftKings and FanDuel were forced to release statements defending their businesses’ integrity after what amounted to allegations of insider trading, that employees were placing bets using information not generally available to the public.
The statements were released after an employee at DraftKings, one of the two major companies, admitted last week to inadvertently releasing data before the start of the third week of N.F.L. games. The employee, a midlevel content manager, won $350,000 at a rival site, FanDuel, that same week.
Since that story broke, one would be hard pressed to find a single individual supporting the notion that what this employee did – and what either Daily Fantasy Sports company allowed to happen – was even remotely kosher.
Experts from the sector and media were speaking on the subject throughout the day on Tuesday.
Chris Grove of Legal Sports Report tweeted:
Problem with no regulation is: no transparency. So players can’t tell how bad these issues are, or who’s accountable
Joe Brennan, Jr, an industry analyst and principal in the up-and-company DFS site FastFantasy, was defending the site and questioning the New York Times motives in reporting the story with such vigor.
I wonder if the NY Times got so anti-DFS b/c former editor Dan Okrent invented fantasy & never made a dime off of it?
He also tweeted:
However, you can’t run ads saying “Billion…Millions…free $200” & not expect that gov’t won’t step in (they watch TV, too).
The Washington Times noted that: “Fantasy sports websites DraftKings and FanDuel said in a joint statement on Tuesday that their employees are no longer permitted to participate in online sports contests for money in the wake of a recent data leak.”
A little too little too late perhaps.
Forbes is reporting that DraftKings appeared more at fault than FanDuel as some have begun to suggest the two companies are in collusion.
If the allegations described in the New York Times are indeed accurate, DraftKings committed a major error by failing to maintain sufficient mechanisms and controls to prevent employee access to highly sensitive data.
As a company that purports to be valued at upwards of $1 billion, DraftKings certainly should have maintained complex firewalls in place to prevent dissemination to company employees of this information in aggregated form. And if DraftKings did not naturally have these mechanisms in place, Major League Baseball should have implemented them upon becoming a shareholder.
McGraw Milhaven, a local St. Louis radio sports talk show host, went right for the jugular Tuesday, calling DraftKings and FanDuel and pyramid scheme.
“You need stooges for a pyramid scheme,” he said. “The people who work at FanDuel and DraftKings have more information than you and me and not necessarily that Nick Foles is great on third down. They have alghorythms that show who’s picked, who’s not picked, where’s it’s opening and they run it through a computer using insider information.”
– Aaron Goldstein, Gambling911.com