PhotoThe two major fantasy sports enterprises are under fire after a DraftKings employee admitted last week that he accidentally released information that he wasn't supposed to. But it turns out the same employee won $350,000 on rival FanDuel the previous week.

That raised the question – was this a case of insider trading? The data was the line-ups of players selected by participants. Critics charged that having access to that information before anyone else would give a player an advantage in fielding a team and thus increase the chance of winning.

“The majority of people in the community take umbrage with the lack of regulations and the sheer number of DK (Draft Kings) players using data that’s not publicly available,” Mike, a fantasy player, posted on the fantasy blog site Rotogrinders.

Denied wrongdoing

Both DraftKings and FanDuel denied that any of their employees did anything wrong or unethical. But the issue for players like Mike is whether someone with insider knowledge of who other players were picking for their fantasy teams would give the insider an unfair advantage.

As we reported last week, DraftKings and FanDuel are highly profitable and unregulated examples of one-week fantasy sports leagues, and a way for people who are knowledgeable about a sport to make a lot of money.

Instead of picking a particular team to beat another team, fantasy players assemble a “team” of actual players, winning points for how well those athletes perform in a particular game. In the case of football, participants “draft” a quarterback, two running backs, three wide receivers, a tight end, a kicker, and a team defense.

There is a fairly complicated formula that assigns points based on how each player performs in a game. For example, a player is awarded points for every touchdown their quarterback throws and for their total passing yards, but points are deducted for each interception.

Recent development

People have been playing informal fantasy sports for years, mostly for fun. It has only been recently that DraftKings and FanDuel has established weekly “seasons,” allowing players to compete for one set of games.

Players pony up an entry fee and can win huge sums if they happen to be in a large pool and win.

While the joint statement from DraftKings and FanDuel declared “nothing is more important than the integrity of the games,” The New York Times reports a DraftKings spokesman has acknowledged that employees of both companies had won big jackpots playing at other daily fantasy sites. Company policies prevent employees from playing on their own sites.


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