Week four of the NFL season proved to be the wildest yet and not what happened in the games, but what happened outside. A controversy has developed stemming from the posting of player ownership percentages by a DraftKings employee before the games were over. The situation has raised serious questions about how daily fantasy sports sites handle information and reinvigorated the debate of whether the industry needs to be properly regulated.
The controversy is not just circulating in daily fantasy sports circles. Major media outlets such as New York Times and Forbes have even picked up the story, putting it on their respective front pages.
So why is this story making headlines?
The Details of the DraftKings Data Leak
One week ago, a user on the RotoGrinders forum made a post expressing concern of a tweet made by DraftKings content manager Ethan Haskill. The tweet contained a link to a DraftKings Playbook page that detailed percentage owned in DraftKings’ popular Millionaire Maker contest, which guaranteed $10 million dollars. The ownership percentages included games that had not yet started.
Haskill apologized for the issue on Rotogrinders by saying the issue would not happen again that he was the only one with the data.
So why is everyone up in arms about this?
The apology and explanation has not been enough to quell the firestorm that has since ensued. Players and industry observers have raised serious questions about how data is handled at daily fantasy sports sites, that could theoretically be used by employees to gain unfair advantage at other daily fantasy sports sites (many sites have existing policies that prohibit employees from playing at the site where they are employed).
How many employees have access to this data? What’s to stop them from using the information to pass on to friends or even use at other daily fantasy sports sites, gaining a very unfair advantage? Not much, say some industry observers.
Although there doesn’t appear to be credible evidence that Haskill used the data for his own gain, players have brought to light that he won $350,000 in a FanDuel tournament from Week 2. Regardless of whether the data was used maliciously or not, players have the right to be concerned about the protection of this data, and have called for employees to not be allowed to play on any daily fantasy sports site.
As daily fantasy sports’ growth explodes due to hundreds of millions of dollars in funding, ubiquitous advertisements and the start of the NFL season, it is increasingly coming under scrutiny and calls for regulation. And this was before “The Leak.”
Statements Released by DraftKings and FanDuel
Realizing the gravity of the concerns about the leak, daily fantasy sports leaders and rivals released an unprecedented 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.
On Monday night, both sites along with the Fantasy Sports Trade Association addressed concerns about employees playing on other daily fantasy sports sites:
The Fantasy Sports Trade Association (FSTA), DraftKings and FanDuel have always understood that nothing is more important than the integrity of the games we offer to fans. For that reason, the FSTA has included in its charter that member companies must restrict employee access to and use of competitive data for play on other sites. At this time, there is no evidence that any employee or company has violated these rules. That said, the inadvertent release of non-public data by a fantasy operator employee has sparked a conversation among fantasy sports players about the extent to which industry employees should be able participate in fantasy sports contests on competitor sites. We’ve heard from users that they would appreciate more clarity about the rules for this issue. In the interim, while the industry works to develop and release a more detailed policy, DraftKings and FanDuel have decided to prohibit employees from participating in online fantasy sports contests for money.
Reaction from the Daily Fantasy Sports Industry
Reaction from the industry echoed the severity of the problem, while suggesting suggesting other daily fantasy sports sites may have to follow suit with protections.
Insider trading allegations at DraftKings and FanDuel. Now counting down to the same scandal in esports with DK, Vulcun, AlphaDraft.
— Rod Breslau (@Slasher) October 6, 2015
If you really want to avoid "insider trading" at DraftKings/FanDuel you'd need to publish every lineup publicly as it's submitted. (1/)
— Nate Silver (@NateSilver538) October 6, 2015
Bigger problem probably not a DraftKings employee playing at FanDuel but leaking lineup info to his buddies, who use it on DraftKings. (4/)
— Nate Silver (@NateSilver538) October 6, 2015
While some are urging restraint.
— Justin Fielkow (@JFielkow) October 6, 2015
Legal Sports Report writes that the DraftKings leak may be a “clarion call” for regulation of the industry. The leak could end up being the turning point of sorts for the industry, which so far has largely self-regulated themselves. The next few weeks and months should give the industry a good idea of where we will go from here.