Those Who Don’t Play at Both Services Should Note Each Has Different Cap Figures, So Start Percentages Are Likely Much Different at Each Site.
A DraftKings employee won $350,000 in FanDuel’s NFL Sunday Million this last weekend, touching off a debate about ethics and inside information in the daily fantasy sports industry. That employee later inadvertently posted on the Internet information about the percentages of entrants who had started each player in the lineup.
It is known in the industry that the information posted to Twitter is helpful in building a lineup which few opponents are likely to create. If players have not been added to many lineups and those players do well, then the chances of winning go up dramatically. Charges that people associated with one of the daily fantasy sports companies might get an unfair advantage come at a bad time for the industry, which is flowing in cash, but also beginning to receive criticism from media members and politicians.
Daniel Wallach: “Akin to Insider Trading”
Daniel Wallach, a gambling lawyer who also handles sports-related cases for the Becker & Poliakoff law firm in Fort Lauderdale, Florida, told The New York Times, “It is absolutely akin to insider trading. It gives that person a distinct edge in a contest.”
Insider trading tends to involve more of a sure thing than a getting information on picked-over players in a daily fantasy sports contest. That is what the player selection would be for those with low start percentages. Still, while Mr. Wallach’s reaction might sound histrionic, he underscores the seriousness of DFS competitors’ concerns. If people at the top companies gain an advantage because they can look at the player start percentages, then it represents a major breach of faith with the customer base.
FanDual and DraftKings Offer Joint Press Release
The reaction from the two major rivals in the DFS industry, DraftKings and FanDuel, was swift. In an unprecedented move, the two companies issued a joint statement on the issue.
Saying that their employees’ access to inside information is “rigorously monitored by internal fraud control teams“, the two DFS sites said, “We are temporarily restricting employees from participating in DFS contests as an interim measure while we work with the fantasy industry to develop and implement a more formal policy.”
2nd Place Finish Netted $350 Thousand
There is no evidence to suggest that the employee used DK’s player “start percentage” statistics to gain an unfair advantage. The player finished in 2nd place, turning $25 into $350,000 in winnings.
Despite the lack of evidence, the perception that the employee gained an advantage could be almost as damaging as if it were true. The issue quickly gained momentum on the top DFS news blogs, which often happen to be affiliates for DraftKings and FanDuel. Rotogrinders was the first to report on the incident and call into question the integrity of the process. Two other leading news sites, DFS Report and Legal Sports Report, began to report on the story in greater detail. Now, the one-day fantasy sports community is abuzz with rumors.
Chris Grove Voices Concerns about Regulatory Oversight
Chris Grove, who operates Legal Sports Report, was quoted by ESPN saying that the appearance of industry oversight could lead to the kind of state-led regulation that most in the industry would prefer not exist.
Mr. Grove said, “There are questions the industry cannot provide a satisfactory answer to. They can’t tell you who has access to what data and what controls they have in place to ensure data isn’t abused. Even if they did tell you, consumers wouldn’t find the answers totally satisfactory. That’s a recipe for regulatory intervention.”
To Regulate or Not To Regulate
Joe Asher, who runs the William Hill Sportsbook in Las Vegas, has been quoted saying daily fantasy is the same as sports betting, so the industry should be regulated. The problem from the standpoint of owners, investors, and players is what form that regulation will take. The federal government has a long history of banning an activity when a sensible set of policies and regulations might make better sense.
Marc Edelman, who has written for Forbes on the daily fantasy sports industry, “There’s a big difference between fixing a game in sports betting and trading on insider information in daily fantasy. It might be difficult to convince a team or a member of a team to lose on purpose. It’s a lot easier to have material information about a player’s mentality or physical condition no one else does and pass that along.”
Is Daily Fantasy Football a Scam?
The question is nebulous to most non-experts. From a novice’s perspective, the advantage to be gained seems limited, but real. Any sort of inside info is bad for the community. In the absence of information, people are likely to believe wild conspiracy theories and the proclamations of unethical commentators.
Those who do not play in both DraftKings and FanDuel contests should note that the salary cap values are much different any given week between the two services. DraftKings tends to have a much wider range of salaries, while FanDuel is bunch more together. Because of that, the percentage of owners who add any one player on FanDuel is going to be much different than it would be on DraftKings. Having inside information on DK start percentages is not going to be the kind of advantage one would imagine it to be on FanDuel.
Of course, the implication from both services is the average employee does not have access to the start percentages, so it is not an issue. What is likely to be more of an advantage is working in the milieu of a daily fantasy sports service. The employee works for a DFS service. He is likely to look the hobby and focus on it a lot, so it is natural such a person (or someone else in that position) is eventually going to win a big prize in a big weekly tournament.
