The daily fantasy sports (DFS) industry, which is projected to bring in over $14 billion in revenue by 2020, is currently embroiled in a scandal that raises a number of important questions about how the game is run.
The industry blog DFS Report and the New York Times recently reported that DraftKings employee Ethan Haskell published competitively sensitive data early on the day of DraftKing's "Millionaire Maker," the site's largest tournament. DraftKings, along with its competitor FanDuel, are two of the biggest DFS carriers in the industry.
"[T]his was published in error originally by myself," Haskell wrote in a forum post featured on DFS Report. "I've fixed the error and we'll be putting checks in place to make sure it doesn't happen again."
Haskell reportedly won $350,000 on the rival site FanDuel that same week.
The Times described it as "a move akin to insider trading in the stock market ... The incident has raised questions about who at daily fantasy companies has access to valuable data, how it is protected and whether the industry can — or wants — to police itself."
According to DFS Report and the Times, the data that Haskell allegedly posted concerned how popular players were on the DraftKings platform before rosters locked for the day's games. This is competitively sensitive because in order to win big in DFS you need to select players that other people overlook.
In a recent statement given to Tech Insider, however, DraftKings said that "the employee in question" had "inadvertently" posted the data, and that after a "thorough investigation" over several days, they found "no evidence that any information was used to create an unfair advantage."
Here's DraftKings' version of events:
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.
But according to industry experts, the concern isn't in Haskell's inadvertent publishing of data. If he didn't have access to the data until the FanDuel rosters were locked, then he couldn't act on it.
According Chris Grove, editor of the trade publication Legal Sports Report, the real problem is that Haskell — who's described by the Times as "a midlevel content manager" — had such easy access to data at all. The apparently lax attitude surrounding access to such sensitive data in a multi-billion dollar industry raises a number of important questions, according to Grove:
• How could a mid-level manager have access to that competitively sensitive data so readily?
• How could that data be posted in such a significant manner?
• Given the amount of employees from each site that play on other sites, shouldn't there be some sort of restriction?
"There's so much money floating around, and the data is floating freely as well, it's not hard to imagine people outside prodding for weaknesses," Grove says. "Seems like they wouldn't have to poke so hard to find someone willing to do it for money, or someone who didn't realize what they were doing."
A joint statement given to Tech Insider from DraftKings, FanDuel, and the Fantasy Sports Trade Association, says that in the Fantasy Sports Trade Association charter has a requirement that employees don't use competitive data from to play on other sites, and they haven't found evidence that Haskell violated those rules.
Still, the statement says, "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."
The industry is working "to develop a more detailed policy," the statement says.
In the meantime, the statement says DraftKings and Fanduel are prohibiting employees from playing fantasy sports for money.
You can read the company's full statements below.
From DraftKings:
"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."
From DraftKings, FanDuel, and the the Fantasy Sports Trade Association:
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.
