’KINGS SIZE CRISIS
DRAFTKINGS, FANDUEL UNDER SCRUTINY
The wildly popular Bostonbased fantasy sports website DraftKings is reeling from accusations one of its employees gained financially from inside information, a scandal that comes as Massachusetts weighs whether to allow the online industry to continue operating in the state.
A DraftKings employee raised concerns among players after he said he accidentally posted data online showing which NFL players were being picked the most for draft lineups for a day’s contest. That staffer won $350,000 on a competing daily fantasy site, FanDuel, the same day, The New York Times reported.
There’s no evidence that the information led to the employee’s win and a FanDuel spokeswoman told The Associated Press that she did not believe there was an attempt to manipulate the contest.
Both sites posted identical joint statements on their websites yesterday saying, “Nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers. 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.”
However, both companies temporarily prohibited their employees from playing in games or tournaments on any other site, the Times reported last night.
Attorney General Maura Healey recently announced she is looking into whether DraftKings and other fantasy sports sites are operating in Massachusetts legally, but said her review does not represent an official law enforcement investigation. The attorney general said she wants to gather more information about how the industry operates before taking further steps.
The fantasy sports market has exploded in recent years with an estimated 57 million people participating, according to the Fantasy Sports Trade Association.
Healey’s review is critical to the operation of the sites in Massachusetts because the state currently has no laws in place restricting them. Her conclusions could determine whether they continue operating here — or whether they simply concentrate on the 44 other states that are content to just let the players play.
DraftKings CEO Jason Robins insisted last week before a crowd of casino executives in Las Vegas that his site is mainly used by stock market traders and chess players, with fewer than 15 percent of the site’s players making wagers in traditional sports books. He didn’t mention the growing online criticism over insider activity.
“It is tantamount to insider trading,” which would greatly harm the industry, said Daniel Wallach, a sports betting law expert based in Florida. He said the statements by the companies offered more questions than answers.
“It’s essentially, ‘Trust us, we’re looking into it,’ ” he said.
Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites, shouldn’t be treated any differently than traditional sports betting and, as a result, should be regulated.
“Fantasy is real gambling,” said Dennis Drazin, chairman of New Jersey’s Monmouth Park Racetrack, during a panel discussion. “A rose is a rose.”
DraftKings allows its 3 million active users to take part in fantasy sports contests for a single day or week instead of over the course of a season. It shells out cash prizes to users who pick the best teams.
DraftKings launched in 2012 and has 260 employees in Boston, New York and the United Kingdom. It has been valued at more than $1.2 billion, according to Fox Sports.