DraftKings and FanDuel Marred by Controversy Amid Possible 'Insider Trading'

Millions of NFL fans have been bombarded over the past few weeks with ad after ad for daily fantasy football websites DraftKings and FanDuel. Now those same fans are asking questions amid allegations of insider trading at the companies. The controversy erupted after an employee of DraftKings inadvertently released ownership data ahead of the start of week 3 in the NFL. He subsequently won $350,000 at FanDuel.

The DraftKings employee in question, Ethan Haskel, said on an online forum last week that the data was posted in error and that he is "not allowed to play on the site" anyway. He went on to win the cash at the competing website, FanDuel.

According to Legal Sports Report, "Ownership percentage is one piece of the puzzle that can be useful in skillfully setting DFS lineups, especially in guaranteed prize pool contests. Top players try to predict ownership percentages, and data about past ownership percentages can be dissected for information."

The two website released the following joint statement:

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.

"It is absolutely akin to insider trading," Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff, told the New York Times. "It gives that person a distinct edge in a contest."

The fantasy sports websites are currently unregulated but many view them as nothing more than gambling and are now calling for tougher regulation.

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