Fanduel DraftKings Scandal

The world of online gambling has been an ever-changing one, and recently it’s taken on a new face in daily fantasy leagues. These websites offer opportunities to place bets on fantasy sports at a daily rate instead of over the span of a full season. This accelerated version of fantasy sports has attracted many due to its faster payouts and less time requirements. The two leaders in the daily fantasy world are DraftKings and FanDuel.

DraftKings states on its website to guarantee at least $200 million in payouts this year, while FanDuel has one contest scheduled in December that will payout $12 million alone.

Technically, daily fantasy leagues are not considered gambling activities. The Unlawful Internet Gambling Act of 2006 established that fantasy sport leagues are skill-based games, not games of chance. If not for this ruling fantasy sports would be completely illegal.

With all of these payouts of course comes controversy. Sept. 27th Ethan Haskell, a DraftKings content manager, placed second in a million-dollar fantasy contest on the FanDuel website. DraftKings performed an internal investigation following the discovery of their employees’ winnings and concluded that Haskell did not have access to insider information previous to lineups being locked and that he placed his bet with the same knowledge as anybody else.

FanDuel and DraftKings prohibit their employee’s from playing on the website they work for but it has been widely known and allowed that employees will play on the respective site. After this controversy, both sites made clear statements that their employees temporarily are not aloud to play on either websites.

Considering the amount of money circulating through these websites, you would expect stricter regulations, but much of the lack of regulation can be accredited to the rapid growth of the websites.  According to ESPN, New York Attorney General Eric Schneiderman has launched an inquiry into DraftKings and FanDuel to determine whether or not employees used data from their company to win prizes from the rival company.

U.S. Senator Robert Menendez and Congressman Frank Pallone also reached out to the Federal Trade Commission through letter regarding the recent allegations against daily fantasy leagues; the word “integrity” was echoed throughout their letter multiple times. Trying to get ahead of the regulatory curve, FanDuel announced its creation of its internal advisory board to focus on integrity of their website. Following suit, DraftKings hired a third party to audit its internal practices.

Many have been waiting for the government to step in and begin regulation in the daily fantasy world. Looking forward we can expect many changes in the world of fantasy sports, hopefully these changes will allow for fantasy sports to continue.