Updated 9:45 p.m. ET with state attorney general investigation
Two leading fantasy sports companies are promising to protect "the integrity of the games" they offer customers, after questions emerged over whether their employees use proprietary information to win thousands of dollars.
The two companies, Draft Kings and FanDuel, released a joint statement this week saying they "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."
Daily fantasy sites such as FanDuel and Draft Kings offer customers the chance to assemble a fantasy team roster (with a salary cap) that they then pit against other contenders. Some games are free to enter; others require buy-ins that range from $3 to $20 and up, with first-place payouts that top $1 million.
On at least a temporary basis, the two large fantasy companies are barring their employees from games on either the Draft Kings or FanDuel site, after a DraftKings employee, in a seemingly inadvertent move, released data showing which NFL players were used in the most fantasy lineups — before some games had started.
That same employee won $350,000 in a contest on the FanDuel site, reports the Daily Fantasy Sports site, which is using the scandal as a spur to call for regulation of the billion-dollar fantasy sports industry.
The New York state attorney general's office has opened an investigation.
A commenter on that initial story wrote, "You would have to be a moron to not believe that you are not being cheated in DFS as presently constructed."
A similar view was put forth by sports and gambling lawyer Daniel Wallach, who tells The New York Times, "It is absolutely akin to insider trading." Discussing the lineup information, he adds, "It gives that person a distinct edge in a contest."
ESPN reports that a "DraftKings spokesman acknowledged that employees of both companies have earned sizable prizes playing at other daily fantasy sites."
In their joint statement, the two large fantasy companies said their workers who have access to lineup data "are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it."
While to some, the daily fantasy site companies only emerged onto the national scene when they launched an ad blitz to start the new football season, both FanDuel and Draft Kings have grown rapidly — and lucratively — in recent years. Consider that FanDuel, founded in 2009, achieved "unicorn status" with a $1 billion valuation, as CNBC reported in July.
Faced with those high stakes, and the need to assure their customers that the contests are fair, the two large fantasy companies issued a joint statement Tuesday titled "Integrity of Our Employees." It reads:
"While there has been recent attention on industry employees playing on FanDuel and DraftKings, 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, we continue to review our internal controls to ensure they are as strong as they can be. We also plan to work with the entire fantasy sports industry on this specific issue so that fans everywhere can continue to enjoy and trust the games they love."
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