Scandal erupts in the world of online fantasy sports

Oct 6, 2015 09:33 GMT  ·  By

News broke on Monday that DraftKings and Fanduel employees used NFL insider information to win big money prizes on each other's websites.

The two companies have issued a joint statement through which they announced they've legally barred their employees from playing on each other's sites. Previously all employees were barred from playing only on their own website.

Fantasy football bigger than ever

Fantasy football relies on the concept of users creating their own fantasy teams out of different players from real NFL teams. Each user scores points based on the performance of that player during NFL games. Fantasy football leagues are usually played for an entire NFL season.

DraftKings and FanDuel are two fantasy football websites which allow users to sign up to one-day leagues, pay an entry fee, and after the NFL games for a particular week are played, win the league's jackpot.

The concept is barely short of what constitutes legal gambling in the US, and many detractors say that the sites should be fined or banned, since they are circumventing all the limitations and regulations to which the gambling industry is subjected to.

Fantasy football websites have access to NFL insider information

For DraftKings, FanDuel, and about any other website to work properly, they usually have legal contracts with the NFL, or persons placed inside NFL teams which provide them with insider information, data used to provide predictions, and power various types of calculations and outcome scenarios.

Now, according to RotoGrinders, an employee of DraftKings has taken this insider information regarding last-minute NFL team roster changes, to create an optimum team, which he set up inside a FanDuel league, where he came in 2nd place in a league with 230,000 other players. The payout was according to the size of the league, and the DraftKings employee won $350,000 / €310,000.

This outrageous usage of insider information only goes to show that the unregulated domain of fantasy sports is just a few inches above criminal activity, and the 2006 federal law proposal that allowed the sites to operate needs to be reviewed.

And if the activities of employees of these two sites isn't bad enough, tech news site Re/code pointed out 3 weeks ago that FanDuel and DraftKings have spent together more than $150 million / €133.8 million on TV and Web ads in the past 3 months, by far more than any other companies in the US. This practically explains why so many users have become annoyed with their ads over the summer.